It is usually done on a lathe to evenly reduce the diameter. This ignores the fact that water flow reduces the pressure and temperature of the exhaust, but is usually OK for short runs. Remember the horse power produced is absorbed by the water and shows up as increased tempriture. Also on long run times the exhaust has a tendency to aureate the water. This mix can reduce its cooling efficiency in the outboard. Many reasons why a larger water capacity is desirable. It almost goes without saying that a fan should be used to keep the exhaust away from the carburetor air intake.
Note third paragraph – this test was done in 1952 . . . 😉

