In a 2-quart saucepan combine peanut butter, water, dry milk, and honey. Cook slowly over low heat, stirring constantly, until mixture thickens. Remove from heat. Stir in granola, then chocolate chips. Let cool 1-2 minutes or until mixture is cool enough to handle. Place coconut in shallow pie plate. With buttered hands shape mixture into 16 balls. Roll each ball in coconut; place in covered container using wax paper between layers. Store in refrigerator. This makes 16 balls. Shared and MM by Judi M. Phelps jphelps@slip.net or jphelps@best.com Posted to MM-Recipes Digest V4 #1 by "Wayne T. Jones" on Dec 19, 1998