Like any crop, a lot goes on behind the scenes to produce this fabric. It is a cash crop, and sometimes the "cash" portion becomes a little domineering, often to the detriment of human health and the environment.
Water
Cotton is guilty of one of the 7 deadly sins: gluttony. Cotton needs a lot - and I mean A LOT - of water to give us those puffy little white clouds we so adore. Couple that with the fact that cotton is often grown in the parched areas of the world, and we've go a problem. Cotton production in these places have intensified drought, erosion, and desertification. The construction of irrigation systems for these fields have carved the natural landscape and permanently altered the hydrology of these areas. Most importantly, drinking water is highly rationed and sometimes unattainable in these areas because it's redirected to the almighty cotton plants.
Fertilizers
How about this little tidbit: almost 1/3 of a pound of synthetic fertilizers are used to grow enough cotton to make ONE t-shirt (1). These fertilizers, as most of us are now well aware, leech into our soils, run-off into our water sources, suffocate our lakes and increase greenhouse gas emissions.
Pesticides
Which crop uses the most insecticides? Yup, cotton. Its production accounts for a whopping 16% of the world's insecticide use (1). Not only that, but it uses some of the most deadly and hazardous chemicals. The three most dangerous insectides to humans are all used in cotton production (1). Take this lovely example from the Organic Trade Association:"Aldicarb, cotton's second best selling insecticide and most acutely poisonous to humans, can kill a man with just one drop absorbed through the skin, yet it is still used in 25 countries and the US, where 16 states have reported it in their groundwater."
Scary, no? And to think that most cotton production is in the developping world, worked by rural farmers without adequate protection from these extremely dangerous chemicals.
Hmm... Does you brand new t-shirt seem a bit dirty to you now?
Image from http://www.organic-cotton.us/