A film that is biodegradable and water-sensitive (e.g., water-soluble, water-dispersible, etc.) in that it loses its integrity over time in the presence of water is provided. The film contains a biodegradable polyester, starch, water-soluble polymer, and plasticizer. The desired water-sensitive attributes of film may be achieved in the present invention by selectively controlling a variety of aspects of the film construction, such as the nature of the components employed, the relative amount of each component, the manner in which the film is formed, and so forth.