It's not really a grammar issue. It's just that the second phrase is a more logical way to describe the situation.
"Because a lot of the lake's water has been polluted" is a more logical answer than a reference to some abstract water somewhere.
But even so, "Because it is polluted" makes more logical sense than either one. It's hard to picture how "a lot" (but not all) of the water could be polluted. Water wouldn't stay separated out in neat zones -- some of it polluted and some of it not.
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