I had this problem and thought it related to the post processing volume being smaller than the spline it’s attached to (I’m a newb so…) i.e. the dry land was larger than the PPV in my case creating an ocean around a large island.
After several attempts to figure out a work around and getting very close (by placing the ocean near to where I want the only accessible beach, then dragging the spline out to the other land edges, leaving the PPV by the beach), I still had the circular edge of the PP effect as shown in the OP (on the right).
Very frustrating, but in looking around to where the issue would show up, I noticed some distant objects being post processed in the otherwise unprocessed area thinking…
I didn’t have a skybox/sphere, so added one, and it’s fixed 
Leaving this here to add to the conversation in order to help build a picture of what’s going on; not attempting to answer or solve the problem (I’m a newb after all).