We had a water cooler when we lived in MA. After working in a bottling plant, I got to the point where I couldn't stand the taste of tap water from the chlorine.

As to the environmental overhead, PET bottles are 100% recyclable, so unless the consumer is clueless, the plastic will be recycled into either more bottles, or rugs, or car parts, ad nauseum. Just because people can throw it in the trash doesn't mean they do.