I just went on Freaks R Us the water is Clear, and i made a small pond in my single player world, the water is also clear, I'll inform red if it does it again.
and my video card is AMD HD5670.
Its clearboth Day and Night
Around a month or so ago I started experiencing the same issue, the reflections of the trees dissapeared. Ive tried looking at the game config file as suggested, the water post processing is set to true but the problem persists. Im running an intel HD4400 GPU. It still looks great though without the reflection on , but with it on the water looked as good as it does in real life!
Anyway I like the new update, it adds a bit more challange to the game - Thankyou to the Devs for such a brilliant game.