Water Rocket Physics
Knowing how different fuels for your water rocket will affect its performance is a matter of understanding the basic physics that go into making it a projectile under high pressure. Once the rocket is filled with water to partial capacity, there should be just enough space at the top of the bottle for air when the bottle is turned upside-down. This space is where the gas catalyst for the "explosion" will rise, causing the pressurized system to take place. Often times this gas is compressed air, as in from a bike pump.
Other Gasses
What will happen if a different type of gas is added besides pressurized air? Gas acts as a source for potential energy in this type of pressurized system, so using it as a variable will affect how your rocket performs with different fuels. No matter the "fuel" you use, your water rocket will perform as a function of volume of water, amount of pressure (PSi), size of the rocket's nozzle, and the amount of water is discharges in flight. Some water rocket scientists like to experiment with carbon dioxide instead of compressed air to give their rocket a real boost.
Fuel Additives
Some water rocket enthusiasts will also experiment with additives such as salt. Salt will increase the density of the water-sodium compound within the water rocket bottle and thus result in greater pressure when compressed air or other gas is added. Soap is also known to increase the density of the rocket fuel, resulting in a greater thrust for the water rocket, allowing it to soar to greater heights.
Nozzle Size
Although it is not a type of fuel exactly, adjusting the nozzle of the water rocket as a variable for improving its height or distance can be another way of modifying your water rocket. A wider nozzle will result in your water rocket discharging rapidly, which will allow it to take off very quickly but not reach a great height. Conversely, a smaller nozzle will result in your water rocket taking off at a lesser velocity, but reaching a higher point before it begins to drop to the ground. Try experimenting with these variables to find the winning combination!