Neither the power, nor cooling, requirements are necessarily environmentally harmful. As always ymmv.

First water; there are plenty of places on the planet where water is bountiful. If you site a data center well (say on a big lake in a rainfall area) then water is not an issue. An "using" water in this way doesn't affect water scarce areas.

Equally lots of electricity can be generated in environmentally harmless ways. Solar, wind, hydro are all clean. (Hydro depending on how and where.)

Yes, in the long run, it may make sense to put data centers outside the US. Norway for example has no problem cooling things down. And hydro is abundant.

Plus, water "consumption" is also variable. Water is used for cooling, but is not necessarily "lost". Its "used" in the sense of "made use of" but may also then be "used for something else".

Sure, it's possible, but we don't seem to live in a world where that is actually the case in practice.

The large AI companies are perfectly happy to draw water to the point that local residents no longer have access to clean tap water, and they are perfectly happy using dirty "temporary" gas generators for power.

We should judge it for its actual use, not its ideal use.