I think there are lots of ways to do this. Make a few different sized sets of donut shaped pieces of 3/4" plywood, buy some thick insulation foam and glue it in between the various rings of plywood, carve the foam or wrap it in muslin and paint it, etc. The water can be done as a lighting effect, or you can create an effect with fiber optics.

Here is a picture of a fountain we built from scratch for a production of Cinderella a few years ago. The dripping water in this case was fiber optics.

http://www.brianmiller.biz/Pc050134s.jpg