There is no water displacement in the game; all water clips through ship hulls and land.  For land, the solution is to make sure that land mass models always have a topographical height that stays above the water level.  Some low profile ships will have the water waves become visible above the actual deck because of this, and in the case with a ship that has an actual see-through grate, instead of a fake grate that is just a texture, then you will be able to see water like that.