Hi!
I'm using PhysEx for water and it has a thin layer of water which erodes the ground without flowing. I didn't find a way yet to make grass, dirt, sand and gravel permeable so the layers just lay around and erode the world.

Closing as "Won't Fix" I'll re-open if I ever work on it.

Water Erosion was not built with PhysEx in mind. I'm not surprised they don't work well together. This is a low priority bug. I'll leave the issue open, but I don't know if/when it'll be fixed.