A flue system is provided for a water heater having improved heat exchange efficiency. The flue system includes an upstream heat exchange portion providing a first pass for heat exchange with water in the water heater. The flue system further includes a downstream heat exchange portion providing a second pass for heat exchange with water in the water heater and a blower positioned between the upstream heat exchange portion and the downstream heat exchange portion. The blower is configured to urge combustion products from the upstream heat exchange portion to the downstream heat exchange portion.