What I have read about diaper services is that if (a big IF) the industrial washing uses less water than at home, it is offset by the sheer number of wash cycles used. Our local diaper service (and I think other services too) let customers throw the diaper with all the poop in it into the pail, and then (I assume) diapers and poop from all their customers goes in the industrial washing machine. Obviously, it takes a lot of washing to get that clean and hygenic.
I do know that the local diaper service has a water recycling program at their industrial washing facility, so that offers some environmental benefit.
Another factor is that the washing facility may not be local to the diaper service. I live in a small city/big town, and the diaper service drives the diapers an hour away to a larger city for washing, thus increasing the environmental impacct of driving.
Advice and commentary on living overseas
DD1 15, DD2 12, and DS 9