<p><span style="color:#27ae60;"><span style="font-size:20px;">Solving the Problem</span></span></p>
<p>To solve this problem, we use the <strong>Percent Decrease Formula</strong>:</p>
<p style="text-align: center;">$$\frac{larger \: number - smaller \: number}{larger \: number} \times 100$$</p>
<p>The teacher started with $16$ liters of water and ended with $14$ liters of water. Let's plug these values into the formula:</p>
<p style="text-align: center;">$$\frac{16-14}{16} \times 100 = \frac{2}{16} \times 100 = 12.5$$</p>
<p>Thus, <strong><span style="color:#27ae60;">the correct answer is C</span></strong>.</p>