Butter 13 x 9-inch pan. Into large bowl, measure cereal. In medium microwavable bowl, microwave caramels and water uncovered on High 2 1/2 to 4 minutes, stirring after each minute, until smooth. Pour over cereal; gently stir until well coated. Add marshmallows; gently stir. Press evenly in pan, using buttered back of spoon.