1. The choice is between D and E: the PROBLEM mentioned in A, B, and C, is obviously ONGOING, since it is EXPECTED TO CONTINUE. ONGOING is therefore redundant.

2. In option D, LACK is a verb: the noun PROBLEM cannot, strictly speaking (and this is the way you should look at things in the GMAT) refer back to a verb. Therefore, no matter how obvious it may be to you that the problem referred to is the absence or shortage of water, you have to take note of the fact that there is no noun such as absence, shortage, or LACK: only the latter as a verb. From this grammatical perspective, PROBLEM therefore refers back to WATER.

3. In option E, on the other hand, LACK is a noun: therefore, PROBLEM refers back to it logically and with no kind of grammatical clash.

Other contributors to this forum would be able to answer your question about the GMAT Club test questions better than I can. The only thing I'd say is that in the Official Guide, and in a different context, it's unlikely that a phrase such as HAVE A LACK would figure in the correct option. The tendency there is very strongly against phrases constructed with HAVE in cases where the the direct use of the verb is possible. Thus, LACK with no adornments. And they are right, in fact, because LACK as a verb means exactly what the phrase HAVE A LACK means, and says it more succinctly. (Just as, for instance, BE PREDISPOSED means HAVE A PREDISPOSITION, and says it more succinctly.)

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