Create a Curves Adjustment Layer like shown below and clip it to the water surface layer. Drag the blue curve up and red curve down to color the water surface blue.
Often when importing objects they will look out of place because they have a different hue than the rest of the scene. When this happens you should color correct the imported object to fit with the rest of the scene by using a Curves Adjustment Layer or a Hue/Saturation Adjustment layer. There are no fixed recipes for this – the knowledge comes from lots of experience.
In our case the water surface has a warm hue (yellow/red) while our scene has a more cold one (blue/cyan). By dragging the red curve down in the Curves Adjustment Layer I lowered the amount of red. Dragging the blue and green curve up increased the amount of blue/magenta thus making the surface blend nicely with the rest of the scene.
Create a new layer (Ctrl + Shift + Alt + N) and use one of the imported splash brushes to create some waves where the water surface meets the underwater. Use the Eraser Tool (E) to erase unwanted splash. Apply a subtle Color Overlay effect to blend it better with the water.
You can apply Shadows, Color Overlay and lots of other effects by double clicking a layer and opening the Blending Options screen. When working with Smart Objects double clicking will open the smart object in another window so don’t that – instead right click the smart object and from the drop down menu choose Blending Options.
Create a new layer and with the standard chalk brush at 40% opacity paint a piece of distand land as shown below and place this layer below the water surface layer. Here’s how your layer palette should look like.
Create a new layer and change the blending mode to Multiply. Choose the round soft brush at 20% Opacity and paint with black on the water surface as indicated below. This will be the shadow of the sea creature. The reason I’m doing this now instead of doing it after I place the creature is because you’ll probably have a hard way finding your way through countless layer and putting this layer where it should be.
Create a new layer and fill it with a deep blue color sampled from the sky(#060733). Change the blending mode to Linear Dodge.
Photoshop has a foreground and a background color. If you press Alt + Backspace you will fill the selected layer with the foreground and pressing Ctrl + Backspace will fill the layer with the background color. Also pressing D will set the foreground color to black and background to white. So if you wanted to quickly fill a layer with black or white you would select the layer, press D and then press Alt + Backspace or Ctrl + Backspace.
Create a new layer. Select a bubble brush and lower the Opacity to 10-20%. Paint some bubbles on the underwater portion of our scene. Use a layer mask to hide unwanted bubbles.
Create a couple of new layers and choose a light ray brush from the light brushes set. Change the blend of the layers to Overlay and create some rays coming from above (use 50% Opacity). Create layer masks for each layer and hide the upper portion of the light rays leaving them visible only underwater.
As you can see the Overlay blending mode is great for light effects. Color dodge is also great for achieving glow effects.