"Necesitas" is singular second person familiar, so "you" must be included as the subject of the sentence: How much water do you need?/¿Cuánta agua necesitas? If the sentence had been third person singular, "¿Cuánta agua necesita?", then it could have been translated as singular "you" formal: "How much water do you need" or with the null subject (it)" "How much water is necessary?" The reason why is because "necesitar" means "to need." "Is necessary" and "is needed" are interchangeable in some English sentences, but not in all of them.
The difference is between active and passive voice. Active voice has a subject (a person doing something) while passive voice does not - it just states what is being done.
The phrase "How much water is needed" uses the passive voice, and is translated as "¿Cuánta agua se necesita?" or "¿Cuánta agua es necesitada?" Both of these are valid ways to say it, but I would use the first option ("se necesita"). (Note, I'm not a native speaker, and the preferred way to say it may vary from place to place; I'm not sure.)
I would personally translate "How much water is necessary" as "¿Cuánta agua es necesaria?", which also uses the passive voice.
"¿Cuánta agua necesitas?" has an implied subject (i.e. "¿Cuánta agua necesitas tú?"), and thus is in the active voice: it has a subject ("You") and the action that subject is doing ("need").