Ken has explained the Diesel Vanagon to a tee, but there is also this: 
The Diesel Vanagon you probably already know lends itself to a VW watercooled inline four engine conversion.
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I bought a 1982 Westfalia Diesel in 1995 and converted it to a 100 hp 1.8 Jetta engine.�� After a rod bearing fried�in 1999, I changed to a '95 Jetta/Golf engine rated at 115 hp and have been driving it ever since. 
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Now at over 235, 000 on this engine and using oil , and having lower mpg and power, I'm considering rebuilding or replacing it with another .
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This '95 engine has proven that it is a workhorse and it is the only VW engine that has been this good to me. 10 years from a 4 cylinder engine that has done double-duty pulling other Westfalias and Vanagons hundreds of miles with a tow bar is very convincing. 
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I like Diesel also but I know just how gutless they are in Vanagons unless they are turboed. Very expensive.NA is fine if you live in a rural area slow winding roads and no traffic. Long weekend road trips on freeways NO.
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The Diesel 1.6 �makes a great tractor or sailboat motor� . Yes tractor, a guy just bought a exhaust manifold from me for the 1.6 he installed in his tractor! 
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Robert
1982 Westfalia

�Is the 83 water cooled diesel a good motor?