Cremation by water is legally referred to as alkaline hydrolysis, chemical disposition, or dissolution.
Like cremation by fire, it is done in a sealed chamber. Mostly water is added to the chamber along with some alkali salts, usually potassium hydroxide. The water is heated and the chamber is often set into motion to speed the process, which can take 4-16 hours, depending on the specific method used.
What happens to the body?
The body is broken down into bone and a liquid of harmless compounds containing amino acids, peptides, sugars and salts which are released with the water into the wastewater system or used as fertilizer because of the potassium content. This effluent is far cleaner than most wastewater.
The bone is dried and processed into ash, very similar to cremation by fire, but about 30% more is returned to the family.
Environmentally Friendly
Cremation by water is said to use only one quarter of the energy that cremation by fire uses and produces less carbon dioxide and pollutants. We cannot find the source of this claim.
Where is it available?
The Cremation Association of North America (CANA) keeps a map of regulatory changes on it Alkaline Hydrolysis page. On this same page CANA tells you how to find a provider in its member directory.
Wikipedia has a table of each state’s policies on its Water Cremation page.