This has been an oft-discussed topic on the blog, and this is the most comprehensive review I've seen to date. According to Slate's Green Lantern, e-books beat print books on every count (carbon, water, chemicals) after the 18th book read on the iPad and the 23rd on the Kindle:
Environmental analysis can be an endless balancing of this versus that. Do you care more about conserving water or avoiding toxic chemical usage? Minimizing carbon dioxide emissions or radioactive nuclear waste? But today, the Lantern has good news: There will be no Sophie's choice when it comes to e-books. As long as you consume a healthy number of titles, you read at a normal pace, and you don't trade in your gadget every year, perusing electronically will lighten your environmental impact.
On the chemicals (sometimes cited as a problem for e-readers):
E-readers also have books beat on toxic chemicals. The production of ink for printing releases a number of volatile organic compounds into the atmosphere, including hexane, toluene, and xylene, which contribute to smog and asthma. Some of them may also cause cancer or birth defects. Computer production is not free of hard-to-pronounce chemicals, to be sure, but both the iPad and the Kindle comply with Europe's RoHS standards, which ban some of the scarier chemicals that have been involved in electronics production. E-readers do, however, require the mining of nonrenewable minerals, like columbite-tantalite, which sometimes come from politically unstable regions. And experts can't seem to agree on whether we're at risk of exhausting the world's supply of lithium, the lifeblood of the e-reader's battery.
Here's the article:
http://www.slate.com/id/2264363/