In just about every city-building strategy game out there, water is static. It doesn't flow; it doesn't affect much; it doesn't change with seasons; and you can't change it. In 1994, I started the Simblob project to experiment with water flow in games, among other things. You could build canals and dams and dikes, divert waterways, and flood the opponent's cities. Well, you would've been able to if I had ever gotten around to implementing the opponent. The problem was that playing with water was way too much fun! I implemented heavy rains, droughts, floods, sedimentation, and erosion. Playing the game was lots of fun too, even though there was very little “game” actually implemented. In the end all I had done was work on graphics and water simulation, and I decided to stop working on it and start something else.
I still think water simulation has enormous potential for a strategy game. Imagine diverting your opponent's main source of water, so his crops fail and his people revolt. Or an enemy operative damaging your main dam, and you scrambling to repair it before it breaks, destroying your cities. Water is incredibly important in real cities, and it should be important in building-based strategy games.
Battle for Atlantis is a strategy game coming out in 2007 that has water simulation. Here's a quote from their web site:
For the first time in the history of RTS, a full physical model of water space will be created. The water has stopped being a “dead area” – a non-interactive flat mirror good only ship sailing. Real waves and tsunamis, flood and destruction of the landscape by water, river flows and waterfalls, splendid underwater effects – all this gives an enormous scope of creation and makes the game world of Atlantis as real as never before.
It sounds promising! 3dgamers has some screenshots. I just hope the water simulation is used more for gameplay than for graphical effects.