It's the water texture material entry in the terrainXXX_data.ini that's causing that. Make sure that it looks exactly like so:
[WaterTextureMaterial]
EffectShaderName=terWaterEffect.fx
DepthBufferCheck=TRUE
DepthBufferWrite=TRUE
RenderedInOrder=FALSE
AlphaTestEnabled=FALSE
CullMode=CLOCKWISE
LightEnabled=TRUE
SpecularEnabled=TRUE
EmissiveEnabled=FALSE
FogEnabled=TRUE
AmbientColor=1.000000,1.000000,1.000000,1.000000
DiffuseColor=1.000000,1.000000,1.000000,1.000000
SpecularColor=1.000000,1.000000,1.000000,1.000000
SpecularPower=10.000000
Reflectivity=0.00000
ZBufferOffset=0.000000
BlendOp=ONE
NumTextureStages=1
TextureStage[01].TextureName=
TextureStage[01].MipMap=TRUE
TextureStage[01].FilterEnabled=TRUE
TextureStage[01].StageColorOp=TEXTURE_MODULATE_DIFFUSE
TextureStage[01].StageAlphaOp=NO_OP