Jesus explains what He meant right in the next verse....
Water is referring to the mothers "bag of water" not baptism...
Niccodemius asked how can a man go back into the womb and come out again (through the "bag of water")
This is what Jesus said to him
Jhn 3:4 Nicodemus saith unto him, How can a man be born when he is old? can he enter the second time into his mother's womb, and be born?
Jhn 3:5 Jesus answered,Verily, verily, I say unto thee, Except a man be born of water and [of] the Spirit, he cannot enter into the kingdom of God.
Notice how He points out the difference between being born through the mothers bag of water and being born again
Jhn 3:6 That which is born of the flesh is flesh; **( the mothers womb)** and that which is born of the Spirit is spirit.
Traditionally in scripture the Holy Spirit is described as living water..
The "womb" is referred to explicitly in John 3. There would have been no need to invent the figure of water in order to refer to the womb, especially since water is firstly related to baptism. This is simply a counterscriptural myth about John 3.
The author's point, however, is that children baptism is compatible with scripture because baptism is an act of birth. What you think of John 3:5 has no bearing on that one way or another.