As far as being environmentally advantageous.. Keeping the LEDs and other components (including the drivers, they do make water block\plates just for that purpose, btw!) cool should keep them from degrading, and ending up in a landfill sooner than later. Heat is the primary killer of electronics.. but then again, some components are specifically designed to operate at certain temps.
Performance wise.. Suppose you could over volt your water cooled LEDs and push a little harder, and boost the maximum output? I know my processors in my water cooled PCs sure benefit, with no condensation. From 2.7 to 4.5 Ghz, with a massive performance boost. Still stays under 65c too, and runs way quieter than an air cooler would..
Still gotta transfer the heat somewhere is right. Right into a big insulated water tank that can act like a mass storage battery, which you can then use another radiator loop to transfer all the heat that built up during the day back into the grow, during the night cycle. Or into the ground, etc? To another flip flopped room?