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There are a few episodes of Dragon Tales that involve Rainbow Canyon, which the kids sometimes sail to to pick out the colors for new paints/clay/etc. So there's no jewels or machine involved as far as I know, but in case your memory is distorting some of the facts...?
Some of this vaguely reminds me of the Doctor Snuggles episode "The Magical Multi-Coloured Diamond", which involved using diamonds to fix a damaged rainbow. I don't know about water, though.
So I already post about it... but it isn't listed under my edits...
@livewithstyle thanks... Dragon Tales is from 1999 but I think the show is older...
@Albertosaurus thanks to you too... but the episode 6 of Doctor Snugles they use the diamond to repair a Rainbow full of holes... there's a machine where they mix lots of gems into a diamond... but no waterfall...
Once again thanks
Até mais ver mr. Poneis

There was a waterfall that shone the 7 colors of the rainbow and a machine that could convert this special water into gems... but I don´t know if it was a episode in some show or if a there was a show entirely built around this waterfall... I can´t remember any characters that protected said waterfall or the guy that created the machine that converted the water into jewels... and worst I don´t know why the machine seemed something false even if we are talking about an animated show...
My memory is so jumbled that for some time I thought it was a episode of the Disney Alladin series... but ended like the episode was about Yago the parrot and a special group of birds that doesn´t relied on humans and the waterfall was a barrier and wasn´t a rainbow at all... it was something created by refraction, a normal one...
Later I thought it was the Paw Paw Bears... but all the show is about bears and a magical pendant that gave life to a magical totem with bear, turtle and eagle... but didn´t find a rainbow waterfall nor a jewel converter machine... the other wiki doesn´t seems to know anything either...