"Se não houvesse água, nós não poderíamos viver."
Translation:If there were no water, we would not be able to live.
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No. It is the subjunctive used to describe a hypothesis about a present/future situation. Houvesse = were (both subjunctive)
Interesting, I see both sides of this. Hypothetical statements "were" sounds correct but the thing it pertains to, in this case "water", is singular so it sounds strange. Imagine changing it to "air", it sounds equally unusual.
I think in day-to-day usage, "was" is used for singular and "were" for plural, but that in no means says it's grammatically correct.