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It is not only helpful to know how to refer to directions while on the water it is downright necessary. There will be times when you will need to communicate quickly with other boaters. It is during these events that you want to make sure everyone is on the same page with regard to direction.
On bodies of water that are not flowing or actively moving in one direction and where the shore is in sight you can say you are heading to the right or left, with reference to your direction of travel. You can also say to the right shore, left shore, or refer specifically to a landmark. In open water situations it is best to refer to the direction you are referencing by North, South, East West. This is especially true when landmarks are a long way off and not evident from each person's perspective.
On rivers that are flowing and in particular on whitewater you refer to the direction from the river's point of view. Upstream is the direction where the river is coming from. Downstream speaks of where the river is going. River-right is the right side of the river as it is seen while traveling downstream. River-left refers to the left bank while traveling with the main flow. This especially needs to be remembered when you are paddling upstream. You may be traveling to your right, but if going upstream, it will be called river-left.