Pipe Waterproof is used to craft Waterproof Pipes. This is the only function that it serves. It is made by putting Cactus Green in a crafting interface. Cactus Green is made by smelting Cactus blocks.
Please note that Pipe Waterproof cannot be crafted in the bottom three squares of any crafting bench; rather only in the top six.
Cobblestone Waterproof Pipe Shapeless Recipe