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The larvae of the china mark moth is the one that attacks the waterlilies. They often cut pieces of the waterlily pad and attach themselves between two layers.
There are several forms of damage. Rounded pieces cut out of the pads are most obvious. When the caterpillar grows larger, they are most often found around the under edges of the pads and can also be found attached to the stem. Hand picking them off will control some of the problem.