Heat oven to 350°F Line 16 muffin tins with baking cups.
Melt butter in med saucepan over low heat. Remove from heat, stir in brown sugar. Add vanilla and egg, mixing well.
Add flour, baking powder and salt. Blend well. Stir in the chopped nuts then pour batter into the lined muffin tins. Bake for 15-20 min until golden brown.
Topping: In small saucepan over low heat, melt caramels with the water, stirring constantly.
Immediately when muffins are out of oven, place chocolate chips evenly into middle of each cupcake. Spoon scant tablespoon of caramel over the chips in each cup. (if caramel starts to thicken, stir in additional water to maintain consistency). Top each with a pecan half. Store in a tightly covered container.