How can water in the atmosphere affect temperature?

Answer 1

The mere presence of water, e.g. a river running through it, does not. But oceanic currents do affect the climate - therefore called the "oceanic climate" - of mostly western coastal areas on the middle latitudes of the globe and the cities located there. The Gulf Stream for instance gives the cities in Western Europe a temperate climate. Similar currents make for instance the west Canadian coastal city of Vancouver the warmest of Canada.

Answer 2

Water in the atmosphere can affect temperature through the process of evaporation and condensation. During evaporation, water absorbs heat from its surroundings, cooling the air. Conversely, during condensation, water releases heat into the atmosphere, warming the air. This can lead to changes in temperature and contribute to the formation of clouds and precipitation.

Answer 3

Water cools the temperature.