I think its a great idea! It could really tie in to a lot of concepts being discussed on this board. If Civ III had natural disasters, then the code would be written on how to deal with floods.
Furthermore, some "city" improvements would only be accessible if the terrain around it supported that type of city improvement. For instance, a dam could be constructed to provide more energy to the city (providing more shields). That dam could be destroyed by either spies or military action, causing the resulting flood to wash out some of the cities down stream...
What about finding that rare plutonium in an underwater cavern? Or improving sea tiles with oil rigs, etc...






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