diff --git a/OpenRa.Game/Graphics/HardwarePalette.cs b/OpenRa.Game/Graphics/HardwarePalette.cs
index f1a6a2c4bd..d1a6e88020 100644
--- a/OpenRa.Game/Graphics/HardwarePalette.cs
+++ b/OpenRa.Game/Graphics/HardwarePalette.cs
@@ -10,7 +10,7 @@ namespace OpenRa.Game.Graphics
 {
 	class HardwarePalette : Sheet
 	{
-		const int maxEntries = 16;
+		const int maxEntries = 8;
 		int allocated = 0;
 
 		public HardwarePalette(Renderer renderer, Map map)
diff --git a/OpenRa.Game/Graphics/Renderer.cs b/OpenRa.Game/Graphics/Renderer.cs
index 47af610e6e..453f2f06c7 100644
--- a/OpenRa.Game/Graphics/Renderer.cs
+++ b/OpenRa.Game/Graphics/Renderer.cs
@@ -31,10 +31,13 @@ namespace OpenRa.Game.Graphics
 
 		public GraphicsDevice Device { get { return device; } }
 
+		public static float waterFrame = 0.0f;
+
 		public void BeginFrame( float2 r1, float2 r2, float2 scroll )
 		{
 			device.Begin();
 
+			SpriteShader.SetValue("palDist", waterFrame);
 			SpriteShader.SetValue("Scroll", scroll);
 			SpriteShader.SetValue("r1", r1);
 			SpriteShader.SetValue("r2", r2);
diff --git a/OpenRa.Game/Graphics/Util.cs b/OpenRa.Game/Graphics/Util.cs
index 4f232ec79e..c8e27fc167 100644
--- a/OpenRa.Game/Graphics/Util.cs
+++ b/OpenRa.Game/Graphics/Util.cs
@@ -46,7 +46,7 @@ namespace OpenRa.Game.Graphics
 
 		public static void FastCreateQuad(Vertex[] vertices, ushort[] indices, float2 o, Sprite r, int palette, int nv, int ni)
 		{
-			float2 attrib = new float2(palette / 16.0f, channelSelect[(int)r.channel]);
+			float2 attrib = new float2(palette / 8.0f, channelSelect[(int)r.channel]);
 
 			vertices[nv] = new Vertex(KLerp(o, r.size, 0), r.FastMapTextureCoords(0), attrib);
 			vertices[nv + 1] = new Vertex(KLerp(o, r.size, 1), r.FastMapTextureCoords(1), attrib);
diff --git a/OpenRa.Game/MainWindow.cs b/OpenRa.Game/MainWindow.cs
index 4ca6ebb756..666ce30c8c 100644
--- a/OpenRa.Game/MainWindow.cs
+++ b/OpenRa.Game/MainWindow.cs
@@ -46,7 +46,7 @@ namespace OpenRa.Game
 
 			game.world.Add( new Actor( "mcv", new int2( 5, 5 ), game.players[ 3 ]) );
 			game.world.Add( new Actor( "mcv", new int2( 7, 5 ), game.players[ 2 ] ) );
-			game.world.Add( new Actor( "mcv", new int2( 9, 5 ), game.players[ 1 ] ) );
+			game.world.Add( new Actor( "mcv", new int2( 9, 5 ), game.players[ 0 ] ) );
 			game.world.Add( new Actor( "jeep", new int2( 9, 7 ), game.players[ 1 ] ) );
 
 			sidebar = new Sidebar(Race.Soviet, renderer, game);
diff --git a/OpenRa.Game/World.cs b/OpenRa.Game/World.cs
index a3bb5c4040..d42b493c28 100644
--- a/OpenRa.Game/World.cs
+++ b/OpenRa.Game/World.cs
@@ -1,6 +1,7 @@
 using System;
 using System.Collections.Generic;
-using System.Windows.Forms;
+using System.Windows.Forms;
+using OpenRa.Game.Graphics;
 
 namespace OpenRa.Game
 {
@@ -19,8 +20,6 @@ namespace OpenRa.Game
 
 		int lastTime = Environment.TickCount + 2000;
 
-
-
 		public void Update()
 		{
 			int t = Environment.TickCount;
@@ -30,7 +29,9 @@ namespace OpenRa.Game
 				lastTime += 40;
 
 				foreach( Actor a in actors )
-					a.Tick( game, 40 );
+					a.Tick( game, 40 );
+
+				Renderer.waterFrame += 0.05f;
 			}
 
 			foreach (Action<World> a in frameEndActions) a(this);
diff --git a/sprite.fx b/sprite.fx
index c11e8b88df..745c28823b 100644
--- a/sprite.fx
+++ b/sprite.fx
@@ -6,6 +6,7 @@ shared texture DiffuseTexture, Palette;
 shared float2 Scroll;
 
 shared float2 r1, r2;		// matrix elements
+shared float palDist;
 
 sampler s_DiffuseTexture = sampler_state {
 	Texture = <DiffuseTexture>;
@@ -64,11 +65,28 @@ VertexOut Simple_vp(VertexIn v) {
 }
 
 const float2 texelOffset = float2( 0, 1.0f/32.0f );
+const float animBase = (96.0f/256.0f);
+const float animLen = (7.0f/256.0f);
+
+float DoPaletteAnimation( float x )
+{
+	float a = (x - animBase) / animLen;
+	float b = (a >= 0 && a <= 1) ? 1.0f : 0.0f;
+	float _;
+	float c = modf(a + palDist, _);
+	
+	return  lerp( a, c, b ) * animLen + animBase;
+}
+
+float2 DoPaletteAnimation2( float2 x )
+{
+	return float2( DoPaletteAnimation(x.x), x.y );
+}
 
 float4 Palette_fp(FragmentIn f) : COLOR0 {
 	float4 x = tex2D(s_DiffuseTexture, f.Tex0.xy);
 	float2 p = float2( dot(x, f.ChannelMask), f.Tex0.z );
-	return tex2D(s_PaletteTexture, p + texelOffset);
+	return tex2D(s_PaletteTexture, DoPaletteAnimation2(p) + texelOffset);
 }
 
 technique low_quality {