Hello,
Depth is free surface elevation minus bottom elevation so there is no reference to datum. This physical depth should remain positive, though nothing in equations really prevents depth from becoming negative. Practically we allow slightly negative depths in one option (1), and in this case depths are kept only slightly negative by smoothing them, and we ensure positive depths in the other option (2). I would recommend that H CLIPPING =YES using the MINIMUM VALUE OF DEPTH is not used though it is an available option, it is indeed used by many other programs but this is not mass conservative, every time you cancel a negative depth or impose a minimum depth you wrongly add water in the domain.
With best regards,
Jean-Michel Hervouet