Always, always, always capitalize the name of your own home planet (or anybody else’s). Unless you mean dirt/ground, the correct form is Earth. Yes, it’s the ground (as opposed to the seas or sky — d’uh) that has flooded, but it’s clear from context that the writer doesn’t mean some piece of land; they mean the world, or at least most of it.
After the flooding of the Earth, humanity relocated to underwater cities and huge spaceships. The two groups have not interacted for decades, until something forces them to.
I’d change spaceships to space habitats. There’s no reason for them to be ships unless they’re intended to travel somewhere rather than hang out in orbit.
(For the record, there is not nearly enough water on Earth to put all the land under water, even if every last bit of ice were to melt. Ever see one of those ‘What if the ice caps melted?’ maps? We’d lose our current coasts, but it’s a lot easier to build a new city on higher ground than it is to build a new city under the Atlantic Ocean. I understand the appeal of these things — had something quite similar in the original version of “that novel,” back in the early 90s — but that doesn’t mean it makes any sense.)