Air cooled heat exchangers / oil coolers are lower in cost and maintenance, and can come in very small sizes depending upon the requirement, and still be effective. Water, on the other hand, has a higher specific heat capacity, density and thermal conductivity, and hence has a greater cooling capacity. Furthermore, the water jacket around an engine is very effective in significantly dampening the mechanical noises.
On the flip side, water cooled heat exchangers / oil coolers are comparatively more expensive than an air cooled heat exchanger / oil cooler. Water also accelerates corrosion of metal parts, and is a favourable medium for biological growth – both of these disadvantages further add to maintenance costs.