I've done stryofoam covered in an epoxy/sand mix, and thought it came out pretty well.
probably works better for underwater sections, since the epoxy will give it a glossy/wet look.
For the above water sections (or for a more natural texture), sprinkle a bunch of dry sand on top, and then rush/wash/vacuum that off once it's cured.
I haven't done this myself, but I've heard people say that chinchilla dust works really well for removing the gloss from epoxy mixes.
Epoxy is generally safe, and it's pretty durable.
Another possibility would be to use some lava rock or something similar for the waterfall section, just silicone them in. Lava rock is great for aquatic mosses and stuff to creep out of the water on, as long as they remain damp.