Why do the rivers and fountains turn to blood?
The rivers and fountains turn to blood as God's righteous judgment on the wicked because they have shed the blood of saints and prophets, so He gives them blood to drink in return.
When the third angel pours out his vial upon the rivers and fountains of waters, they become blood, just as the sea did before it. Scripture gives the reason plainly: the angel of the waters declares that the Lord is righteous in this judgment, "For they have shed the blood of saints and prophets, and thou hast given them blood to drink; for they are worthy." In other words, this plague is not random or arbitrary. It is a direct and fitting response to the bloodshed the wicked have committed against God's people. Because they poured out the blood of the saints and the prophets, God now pours out blood for them to drink.
Another voice from the altar confirms this judgment, crying, "Even so, Lord God Almighty, true and righteous are thy judgments." This shows that the turning of the waters to blood is understood in heaven itself as a just and deserved recompense, not merely a display of raw power.
This plague also has a precedent. It happened before in Egypt, when Moses stretched forth his hand and the Lord turned the river, the streams, the ponds, and all the waters of Egypt to blood, so that the fish died and the Egyptians could not drink. What God did once in judgment on Egypt, He does again on a global scale in the vials of His wrath, showing that the pattern of His righteous judgment continues and intensifies at the end of the age.
So the rivers and fountains turn to blood because it is God's righteous answer to those who shed the blood of His saints and prophets. It is portrayed as a deserved and just judgment, part of the cup of God's wrath being poured out fully upon a rebellious world.
The scriptures
And the third angel poured out his vial upon the rivers and fountains of waters; and they became blood. And I heard the angel of the waters say, Thou art righteous, O Lord, which art, and wast, and shalt be, because thou hast judged thus. For they have shed the blood of saints and prophets, and thou hast given them blood to drink; for they are worthy. And I heard another out of the altar say, Even so, Lord God Almighty, true and righteous are thy judgments.
Thus saith the LORD, In this thou shalt know that I am the LORD: behold, I will smite with the rod that is in mine hand upon the waters which are in the river, and they shall be turned to blood. And the fish that is in the river shall die, and the river shall stink; and the Egyptians shall lothe to drink of the water of the river. And the LORD spake unto Moses, Say unto Aaron, Take thy rod, and stretch out thine hand upon the waters of Egypt, upon their streams, upon their rivers, and upon their ponds, and upon all their pools of water, that they may become blood; and that there may be blood throughout all the land of Egypt, both in vessels of wood, and in vessels of stone. And Moses and Aaron did so, as the LORD commanded; and he lifted up the rod, and smote the waters that were in the river, in the sight of Pharaoh, and in the sight of his servants; and all the waters that were in the river were turned to blood. And the fish that was in the river died; and the river stank, and the Egyptians could not drink of the water of the river; and there was blood throughout all the land of Egypt.
From the books
This answer is drawn from these passages in the Mary Banks Faith Library.