Heat capacity favors water or other liquid cooling. Meaning, how much weight or volume of air vs water is required, to lower the temperature of whatever you need to cool.

http://koolance.com/cooling101-heat-transfer

Of course, there are cost tradeoffs. Air cooling is typically easier to install and to run, but eventually becomes more expensive overall.

http://www.bluevantage.net/userdata/userfiles/file/Water%20vs%20Air%20Cooling.pdf

In cases where lots of heat is to be removed, and especially if lots of heat has to be removed from a small area, water is used to transport that heat to a location where large water to air heat exchangers can be located conveniently. Or the hot water can be cooled in a large body of water.

i do not think there is "water or air" answer. Each has pros and cons. Water has higher specific heat, but may cause Legionalle. when exposed to light, water may become greenish. There is also a system which is air cooled but water is sprayed (atomised) on the fins

Dr Ooi when using water to cool the condensers it  always should be chemically treated and replaced from time to time not to form Legionalle  and mud. The system of spraying water over the condenser is not practical in regions where the air is dusty as mud may form on the cooling fins and obstruct  the air flow through them rendering an inefficient condenser.

Dear Professor Kamal,

It is reported that there is no one perfect chiller for all applications. There are many aspects that come into effect when choosing what chiller would be best for a building and its cooling system.

1. Space is one of these issues. Air cooled chillers can utilize open space, such as a parking lot, roof or ground level area. Water cooled chillers are smaller in size, but require a mechanical room and cooling towers. On the flip side, air cooled chillers can have serious issues with recirculation if there are walls higher than the unit or too many units to close together. If there is a situation where outside walls are required for building code and the unit will not be receiving enough fresh air, then a water cooled application may be the best option.

2. Sound is another issue that may come into the equation. With any chiller sound is inevitable, air cooled chillers generally have a different decibel because of their fans. There are things that can be done to reduce the sound on chillers, but the best way to negate the sound is to purchase a quieter unit upon decision.

3. A major part of the equation these days is cost. A detailed cost vs. benefit analysis is advised in any major equipment change. While one chiller may have lower initial costs, it may also have a shorter life span and higher operating costs.

4. Lifespan is huge in the decision of which unit to choose. Talk to a local contractor, to find out what kind of lifespan they have seen from units similar to those being looked at for the building. There are steps that can be taken to increase lifespan on many units. When speaking with the contractor ask them about these additional steps to ensure the longest life for the unit.

5. With so many decisions being based on cost and purely cost alone, quality is sometimes thrown out of the equation. Quality is a major factor of the equation and should always be thought of. Quality of the product and the contractor who will be doing the job are both very important.

When it comes time to install a new chiller, these points should help in that field. There are many advantages and disadvantages to both kinds of chillers and some of those are listed below:

Air Cooled Advantages                                 

Install cost is generally lower

Less Maintenance depending on application

No need for a mechanical room          

Cooling Tower not needed    

Condenser pumps not required     

Air Cooled Disadvantages

Generally less efficient

Life span is not as long

Usually have more operating noise  

Water Cooled Advantages

Usually have a longer life

Higher efficiency 

Indoor placement

Larger tonnage capabilities

Refrigeration containment

Water Cooled Disadvantages

Additional maintenance costs

Water treatment costs

Mechanical room needed

Regards

Dear Kamal,

I totally agree with Mr. Nabil Elsharif in what he explained which covering the issue from different sides. The selection of appropriate chiller depends on many factors according to the application. The size of the plant, the operating conditions, the nature of the fluid to be cooled, the available space, durability and corrosion resistance are among the factors for selection the suitable one. The cost consideration should not be ignored as well. 

Regards

Please  check  it

http://www.coolingtechnology.com/about_process_cooling/water-cooled-chiller/

Please  check  it

http://www.coolingtechnology.com/about_process_cooling/water-cooled-chiller/

Please  check  it

http://www.coolingtechnology.com/about_process_cooling/water-cooled-chiller/