Those Dam Goblins (Revised)

A few years ago, human settlers discovered a marsh-covered valley that they knew would provide fertile cropland if only the marsh could be drained. They built a temporary camp, and then followed the nearby river--the source of the swamp's water--to a neighboring highland where it empties from two cliffs some distance to the north. The settlers dammed the river, diverting its flow into a series of caves that later fed this water into an underground river, and the marsh was soon drained and ready for tilling. They quickly built a settlement (including a dozen farms, a general store, and a livery) and commenced farming this now-exposed lowland. Their crops grew strong and fruitful, and the settlers knew they had found their home.
What they did not realize was that the caves into which they had diverted the stream were far from unoccupied. The deflected water flooded a goblin lair, ousting the ornery creatures and reaping their undying hatred. Now, the goblins seek deadly revenge!