Labouring and giving birth in water is a choice (if you are allowed to choose). The advantages below can be coincidental to this choice, and are mainly related to using the bath in labour, rather than having an actual water birth. There is no evidence to support that your baby will be 'better' because they were born into water birth and, as most water births are unplanned, it is important to be flexible and open to the possibility, rather than focussed on needing to achieve it.
Some physical advantages of using the bath can include:
Decreased need for medicated pain relief
Fast dilation of the cervix
Lowering your blood pressure
Less need for an oxytocin drip
Less tearing and episiotomies
Satisfying birth experience
Decreased need for medicated pain relief. Whether you end up having your baby in the water or not, the main motivation for most women getting into a bath during labour is to use a natural form of pain relief. In most cases it helps them avoid using medical forms of pain relief, along with their possible side affects (although a few women will use the gas in the bath as well). The warmth of the water directly relieves some of the pain, but the main way a bath works is by helping you feel more relaxed and less fearful. Within half an hour or so your body produces less of the of 'fight / flight' hormones (adrenaline and noradrenaline). These are the hormones you release when you are feeling anxious or threatened. As these are reduced the body produces more endorphin hormones, which give you natural pain relief. Groups of women using the bath in their labours have been shown to rarely use narcotic medications such as Pethidine.
Fast dilation of the cervix. Studies so far on this are inconclusive but there are many documented cases of women getting into the bath in good strong labour (more than 4 cms) and becoming fully dilated (10cms) within an hour or two.