Adjust oven rack to middle position and heat oven to 475 degrees. Spray 13 by 9-inch baking dish with vegetable oil spray. Spread pasta into prepared dish. Pour marinara sauce and water over pasta and toss gently with tongs to coat.
Using hands, combine beef, panko, pesto, 1 teaspoon salt, and 1/4 teaspoon pepper in bowl until well combined. Pinch off and roll mixture into 1-inch meatballs (about 15 meatballs). Place meatballs on top of pasta in dish. Cover dish tightly with aluminum foil and bake for 30 minutes.
Remove dish from oven and stir pasta thoroughly, scraping sides and bottom of dish. Return uncovered dish to oven and continue to bake until pasta is tender and sauce is thickened, 5 to 8 minutes.
Remove dish from oven. Toss to coat pasta and meatballs with sauce, adjusting sauce consistency with extra hot water as needed. Let cool for 10 minutes. Season with salt and pepper to taste, sprinkle with basil and serve with Parmesan.