It looks like a location problem because that code is perfectly fine for adding the icon.
Since I don't know your folder structure, I suggest adding a simple check:
File imageCheck = new File("water.bmp");
if(imageCheck.exists())
System.out.println("Image file found!")
else
System.out.println("Image file not found!");
This way if you ever get your path name wrong it will tell you instead of displaying nothing. Exception should be thrown if file would not exist, tho.