Small Water Bottle

Fill it, carry it, drink from it when the thirst bar drops. The game text lists the controls: left click drinks, right click fills it from a water source or pours it out. That makes it a reusable canteen rather than a one-time drink, so the first one you pull from loot should stay in your hotbar.

Where you fill it is the whole trick. Say you plan to paddle a kayak along the coast to a fishing village. The sea around you is salt water, which takes health instead of fixing thirst, so fill the bottle with fresh water at a river before you reach the boat. If you scooped from the waves by mistake, pour it out before you drink, not after.

It does the same job as a bota bag, so there is no point carrying both. The bag is the one you craft from cloth while no bottle has turned up. For hauling water to planters or a long stay at a desert monument, a water jug holds far more and is worth the frags.