I've been toying with the idea of harvesting hydro power with Lego for some time. While a prototype of a crude yet functional water turbine could be done quite easily with Technic parts, building a small, medieval minifig-scale watermill was too attractive idea to ignore, even if it meant a little detraction from my usual Technic & Classic Space habitat.
As evident from the photos, its design is really simple, yet it took a couple of unsuccessful tries and total rebuilds to make it work smoothly and reliably. A flume, to which a water source is connected at the top end, leads the water over the millhouse and drops it on the water wheel blades, from where it falls into a riverbed, and finally, flows out from the MOC. In the house, the axle is geared down to one third where it rotates the millstone, of course using standard Technic parts. Everything else on this 32x32 diorama is purely decorational.
The first version was designed with an undershot water wheel, but unfortunately the water stream was just too weak to start even the freely-rotating water wheel. I suppose it could be done with a strong stream and the blades that match the riverbed very tightly, but I rather opted for the overshot form, which works much better: it provides sufficient torque, is started easily, and keeps a nice proportion between the water flow and its rotation speed. Actually, it requires very modest flow, as it works reliably even below one liter per minute.
Still, the amount of torque provided this way is really minimal: if you will want to build one, forget about doing any "serious" work such as lifting weight unless you are ready to accept it will be drastically geared down and thus intolerably slow, or even worse, attaching it to a motor axle (using it as a generator) to provide some tiny amount of electric power. A seriously large MOC with complex bucketed wheel(s) that could handle flows of at some 20L/min or more could perhaps do that, but building this I didn't want to venture into megalomania.
Watertightness is ensured by a bit of cheating: both the flume and the riverbed have double walls and floors that snugly fit one into other, with a flexible plastic kitchen foil spread between them. It remains watertight even when deformed by the studs connected through it, and if cut precisely at the outer edges with a razor blade, it can be completely hidden from view. The flume is at a slight angle to help the water flow towards the wheel, and of course, the riverbed has a dent at the far end to let the water drain exactly there, instead of flooding the entire diorama.
This MOC has confirmed the basic idea of using hydro power, and the next step might be an advanced Technic water turbine that could handle considerable flow and provide more efficiency and power.