Here we identify structural inhomogeneity on a micrometer scale across the surface of a CH3NH3PbI3 perovskite single crystal. At the crystal edge a local distortion of the crystal lattice is responsible for a widening of the optical bandgap and faster photo-carrier recombination. These effects are inherently present at the edge of the crystal, and further enhanced upon water intercalation, as a preliminary step in the hydration of the perovskite material.