What causes water to change color?
Solution 1:
When you see water changing colors, you are moving into a new biome. For example, if you see a pool of water right between a Snow and Desert biome, you will see the water change from icey blue to muddy orange. When you're underground, you could also be transitioning between layers. This will be accompanied by a change in backgrounds.
Aside from that, water now turns red during a blood moon.