In our previous work we have introduced a bifunctional model to predict the otherwise surprising charge migration in peptides and their chemical reactivity. Such transfer of charge and distal reactivity is often found to occur a long distance from the original site of excitation and is typical in biological signal transduction. This model introduced the subject of reactivity at a distance, in contrast to classical local reaction theories. Our model was initiated by our experimental observation of extremely efficient charge transport in peptides over substantial distances, subject to certain energetic rules, but now survives the introduction of the aqueous medium. The question we wish to study in this paper is the effect of a water environment on such an isolated system. Experimentally it is known that this effect is enormous, in that the charge in the water environment decays over a characteristic distance of only some 1 Angstrom, whereas in our isolated peptide system there is very little attenuation observed. We here do extensive molecular dynamics calculations in the presence of 611 water molecules and demonstrate that our original mechanism survives entering the liquid phase but that the effect of the water is to create a hydrophobic jacket around the peptide that seriously constrains the motion of the peptide. Such motion in the peptide is an essential element in our bifunctional model. In fact when we now calculate the efficiencies in water, we obtain a value near 2.4%, which translates into an exponential beta factor of 1 Angstrom(-1), which agrees with the value experimentally observed for charge transport of beta-sheet protein charges in water. Hence even though the experimental results in the gas phase and in water differ by some orders of magnitude, our bifunctional model is able to encompass both extreme situations, the isolated system and the peptide in the water environment. In both cases the calculations agree with the experimental results.