This watercolor effect is implemented as a Post Process Material in Unreal 4. The principals behind it are rather simple, and can be easily replicated in any renderer where you have access to G-Buffer data.
I ran sobel filters on both world space normal and depth, and combined the two to get a decent line tracing. Then, I used a perlin noise with flipbook animation to add noise to the UV input, creating a line boiling effect. I then simply used this line work as a mask, masking a pencil texture, which I also applied flipbook animation to.
For coloring, I started by blurring the entire scene color to get that color bleeding effect on watercolor paintings. I made a watercolor stroke mask with watercolor textures I found online, and desaturated it. The mask was then used to blend the blurred scene color onto a watercolor paper texture.
0.2 ms on GPU.
watercolorShader