Formamide (NH2CHO, FM) has been considered an active key precursor in prebiotic chemistry on early Earth. Under certain conditions such as dry lagoons, FM can decompose to produce reactants that lead to formation of more complex biomolecules. Specifically, FM decomposition follows many reactive channels producing small molecules such as H-2, CO, H2O, HCN, HNC, NH3, and HNCO with comparable energy barriers in the range of 73-82 kcal/mol. Due to the likely presence of water on prebiotic Earth and the intrinsic presence of water following FM decomposition, we explore the effects of water oligomers, (H2O) with n = 1-3, on its dehydration, dehydrogenation, and decarbonylation reactions using quantum chemical computations. Geometries are optimized using MP2/aug-cc-pVxZ calculations (x = D,T), and relative energies are evaluated using coupled-cluster theory CCSD(T) with the aug-cc-pVxZ basis sets (x = D, T, Q). Where possible the coupled-cluster energies are extrapolated to the complete basis set limit (CBS). Water classically acts as an efficient bifunctional catalyst for decomposition. With the presence of one water molecule, the dehydration pathway leading to HCN is favored. When two and three water molecules are involved, dehydration remains energetically favored over other channels and attains an energy barrier of similar to 30 kcal/mol.