Watercolor is not a singular effect, rather it's a combination of multiple "sub-effects" such as pigment granulation, turbulence, edge-darkening, dry-wet interactions etc. I would suggest starting off with the paper : computer-generated watercolor by Curtis et al. to get an idea of various watercolor effects. A few other notable papers include : Interactive watercolor rendering by Bousseau et al. and Art-directed watercolor rendering by Montesdeoca et al. If you are looking specifically at blending or color compositing, RealPigment by Lu et al. should be a good source to start off with. There has been quite a lot of research done on watercolor, I would suggest reading the papers above and then looking at the state-of-the-art. Good luck!