Small and shallow water bodies are common in Arctic lowland tundra landscapes whose thermal properties differ significantly from the surrounding tundra. Water bodies recharge their heat storage during warm summer months and act as a source of heat during winter. This can lead to continuously thawed sediments below the water body (talik). A dynamic one dimensional heat transport model for permafrost soils was extended to include hydrothermal processes in water. It accounts for density driven advection, wind induced mixing, absorption of light and turbulent fluxes at the water surface. Model results were validated with field data from long term measurement stations on Samoylov Island in the Lena River Delta. Simulation results reproduced the most important features of the thermal dynamics of Arctic ponds. Shortcomings in the representation of snow cover indicated the great importance of including time varying snow thermal properties due to metamorphosis processes of snow. Long term simulations of the thermal regime below water bodies showed that there is a threshold behaviour with respect to talik development. A 10-20 cm increase in water body depth evoked the sudden appearance of a talik. Talik formation was possible within the course of 2-3 consecutive years if winter conditions were comparably warm or featured a thick snow cover. The development of talik is triggered by the succession of these short term events rather than by long term air temperature increase. The presented model enhances our knowledge about the susceptibility of permafrost below shallow water bodies.