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As with streams, waterfalls are typically used in conjunction with other water features. They may feed water from a stream into a pool, or they may exist within layered fountains or pools.
Waterfalls can look great if properly done, but they can also be amongst the most difficult water features to design and construct. Water Features for Small Gardens has an entire section devoted to waterfalls that discusses preparation, selecting stones, placing stones, and size and flow of the waterfall. It's a good resource book to pick up if you are considering building any sort of water feature.
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