Environmental Economics
Sunday January 11, 1998 7:43 AM EST

WASHINGTON (Reuters) - Economic growth that continued at a feverish pace in 1997 is outstripping the earth's ability to furnish resources to fuel future growth, the Worldwatch Institute said Saturday.

"The global economy as now structured cannot continue to expand much longer if the ecosystem on which it depends continues to deteriorate at the current rate," Worldwatch's "State of the World" report, an annual assessment of mankind's impact on the environment, said.

"The challenge facing the entire world is to design an economy that can satisfy the basic needs of people everywhere without self-destructing. The enormity of this task is matched only by its urgency," the report said.

But researchers at the Washington think-tank said there was time to adjust the world's economy to prevent disaster, and that economies could make money in the process.

"Just as the challenge is unprecedented, so too are the economic opportunities for countries and companies that pioneer the technologies needed to get there," Worldwatch said.

Reaching a sustainable economy hinges on stabilizing the world's population, as well as on reusing and recycling materials, and getting power from clean, renewable energy sources, it said.

But in an ever quickening pace over the last 50 years, it said economies have gone the other direction -- producing more and more disposable goods for a burgeoning population.

This growth has come at a cost of shrinking forests and wetlands, declining water resources, collapsing fisheries, and disappearing species, the report said.

Spiraling use of fossil fuels that produce heat-trapping carbon gases is changing the earth's climate, worsening prospects that mankind will be able to adequately feed the growing population and protect itself from worsening storms, droughts and heat waves, it said.

While the World Bank recently predicted that Brazil, China, India, Indonesia and Russia would become economic superpowers in 20 years, Worldwatch said the bank's economists did not mention likely costs of such growth -- deadly air and water pollution, rising carbon emissions, depleted resources.

Disaster can be averted only if these and other developing nations recognize that the "western fossil fuel-based, automobile-centered economy is not a viable model for the world," the report said.

But Worldwatch held out hope that the United States and the European Union are shifting towards more sustainable economies that could guide rapidly emerging economies.

"I think the last year has been pretty striking with the number of announcements by energy and automobile companies for environmentally-sound technologies," Christopher Flavin, a contributor to the report, said in an interview.

For example, he said, Toyota Motor Corp offered a new super-clean hybrid vehicle, and the big three U.S. automakers were poised to follow.

The report said there were plenty of available technologies to expand recycling and use of cleaner, renewable energy. But the key would be exercising the political will to use taxes and other market incentives to spur their use around the world.

"Most environment ministers understand that we are headed for economic decline, but there is not yet enough political support to overcome the vested interests that oppose changes." Worldwatch said.