The goal of this article is to develop a framework that enables us to better understand the rich set of interactions that occur between physical and biological systems embedded in the water cycle. We begin by acknowledging that water is both a medium and a driver of interactions in the natural environment, and that the two roles are fundamentally different. As a medium, water provides habitat and life support to living systems while the variability of water flow drives both ecological and biogeochemical functions. The two roles converge within the water cycle, in which a myriad of processes (characterized as a network of positive and negative feedback cycles) interact; that is, the water cycle is a hypercycle, within which the network of natural processes self-organizes into a hierarchy of dissipative systems. The flow of water, particularly its variability, is an important agent for communicating information across the connected dissipative systems, and determining the self-organized, evolutionary course they follow.