We had some friends have a similar issue. They have a bit of property that is remote and pretty well secluded from view. One day the wife went out to pick up some firewood and found someone had hauled in a singlewide trailer and set up house. They pulled out a fake deed and bill of sale for the property. Now there was no question as to who owned the place, but since they had a "deed" the law said the real owners had to let the squatters stay until it was all sorted out. In the meantime, the squatters put up a fence so the owners couldn't even get on the property without cutting a lock.
It drug on for a year. At one point the squatters had assault charges filed on the owners claiming they attacked them. The husband admitted to pushing one of them out of the way when he tried to block the owner from coming through the gate.
So yeah the water thing worked out ok, but get rid of them. The law isn't in your favor on this one and you're a lot nicer than I am. If it'd been me I would have hooked onto that trailer and hauled it off.