The Chesapeake Bay is in trouble, despite curbs on industrial polluters and sewage plant discharges in its watershed and recent limits on development along its shoreline.

Toxins, sediment and trash cloud its once-clear waters. The bay's most potent image -- the skipjack boat, worked by watermen, loaded with oysters -- has virtually disappeared. The fabled rockfish is now so scarce that catches must be limited.

According to environmentalists, business interests and government officials studying the bay's decline as members of state-appointed commissions in Maryland and Virginia, the next steps in cleaning the bay will require fundamental changes in the region's way of life. Those changes might mean fewer large home sites, more compact development and major restrictions on taking farmland for subdivisions.

"It's a misconception that it's a birds-and-bees issue," said David Carroll, Chesapeake Bay coordinator for Maryland Gov. William Donald Schaefer. "It's also a fiscal issue. Jurisdictions cannot afford to pay for all the schools and roads" that the region's sprawl requires.

Maryland and Virginia enacted laws in the 1980s to curb development on the bay's shoreline, but those are just the beginning. On Tuesday, a commission appointed by Schaefer is expected to announce proposals to restrict commercial and residential development throughout the bay's Maryland watershed. The commission includes leaders from the state's most prominent business, environmental and local government associations.

A Virginia panel is studying similar ideas, but is years away from reporting.

If all the steps under discussion in Maryland and Virginia were implemented, people would find fewer three-acre home sites in the suburbs and a greater number of compact developments mixing homes, town houses, condominiums, offices and shops. Mass transit would be expanded aggressively.

In rural areas such as the Eastern Shore or Virginia's Northern Neck, new homes could be built only near existing towns. States would have to raise millions of dollars, potentially through new taxes, to preserve fragile land from development and build roads that would have been underwritten by developers.

Developers would have to accept that some land is off limits; local jurisdictions might have to seek state approval for major zoning decisions they now regard as theirs to make; property owners would face restrictions on what they can build; and citizen groups would be less able to fend off some developments in their neighborhoods.

Controls of that magnitude would meet stiff resistance and may never be implemented, advocates acknowledge. But today's radical ideas often influence tomorrow's government policies, and such proposals from serious groups, including business and development interests, illustrate that pressure will increase on people who live far from the bay to share the responsibility for restoring it.

"When everybody's unhappy, maybe you're on the right track," said Michael D. Barnes, the former U.S. representative who heads Maryland's growth commission. "Everybody will perhaps have to give up something, but the fact is we're losing the Chesapeake Bay."

Some officials think steps taken to restore the bay could be sold as remedies for problems that resonate in almost every local election in the region: nerve-racking traffic on inadequate highways, stand-alone residential developments miles from shopping centers, soaring housing prices and rising taxes to pay for extending public services to once-rural areas.

"What I would love to have people think about when they see pavement, and get their teeth on edge because they've been spending an hour and a half in a traffic jam, {is} . . . that they make that connection to the Chesapeake Bay," said William C. Baker, president of the Chesapeake Bay Foundation.

The bay inspires superlatives: the region's richest environmental treasure, its most popular place of recreation, a fishery so bountiful that it ranks only behind the Atlantic and Pacific oceans in economic importance.

Two hundred miles long, it is home to more than 2,700 species of plants and animals, and from its waters comes the world's largest catch of one of them, the blue crab.

Threatening those assets is the pollution that reaches the bay from places nowhere near its shores, such as fertilizer from lawns in Frederick, Md., or automobile exhaust in Fredericksburg, Va.

Contamination is carried by rivers, underground springs and air currents that stretch through the Chesapeake's 64,000-square-mile watershed -- including parts of New York and Pennsylvania, as well as Maryland, Virginia and West Virginia -- like roots radiating from a giant tree. This poison kills fish, chokes growth of underwater plants -- which furnish food and habitat for fish and birds -- and speeds the decline of rockfish, oysters and other species.

The bay's population of algae -- the smelly stuff that covers the water in mats of green -- has exploded, soaking up oxygen that other species need to live. The bay's acreage of water with little or no oxygen has grown 15-fold since the 1950s, and fish kills are spreading into new areas.

The 2020 Commission, appointed earlier by the region's chief executives, warned last year that the expected arrival of 2.6 million more people between the Maryland-Pennsylvania border and Tidewater Virginia by 2020 could overwhelm the environmental gains made by costly sewage plant improvements and reductions in industrial pollution. The commission included representatives of business, environmental groups and local governments. It called for broader and tougher rules to manage growth.

Sprawling subdivisions rising from rural cornfields are a major pollution culprit, the commission said, because they use land so inefficiently, waste natural resources and encourage longer commutes and shopping trips.

The 2020 Commission estimated that it would cost the region $10.8 billion more over the next three decades to supply roads for continuing the current pattern of low-density development, compared with the same number of homes in more compact subdivisions.

For example, if Fairfax County had been built as compactly as Reston, its 25-year-old "New Town," the same number of people would be living on one-third the amount of land now being used, by one estimate.

Opponents say such restrictions would limit landowners' freedom of choice.

"There are environmentalists who believe that people are the problem and we should go back to the days of the Indians," said Richard Nageotte, a Woodbridge land use lawyer who represents property owners and developers.

According to several studies, the environmental effects of growth begin during construction, when wind and water erode up to six truckloads of dirt a year from each acre of land under development, clouding creek water and choking fish.

Trees and grass, which filter out pollution, are replaced by slick pavement. An average summer storm dumps 150 million gallons of water into Anne Arundel County's Sawmill Creek, carrying contamination more toxic than sewage.

Nitrogen wafts to the bay from car exhausts, setting off a process that stunts growth of underwater vegetation. Motor oil drips onto streets or is carelessly thrown out, washing into waterways during storms.

Warning signs of the area's growth boom already can be seen. Lawn fertilizer has increased phosphorus levels in Fairfax County streams, promoting algae. More nitrogen is reaching the bay from sewage plants because more homes are hooking into waste treatment systems.

The volume of fresh water reaching the bay is down, disrupting its delicate ecology, partly because homes and farms are drawing more water from underground springs. The U.S. Army Corps of Engineers is considering a proposal to lower the level of a popular recreation lake in Pennsylvania during dry years to compensate, upsetting Pennsylvania residents who say they should not have to make the sacrifice to protect the bay.

Bay advocates say the effect of the population boom is intensified because people are living on larger lots or owning more than one home.

Between 1970 and 1980, Maryland's population grew 7.5 percent but the amount of developed land grew at more than double that rate, 16.5 percent. If the trend continues, 59 percent more land in the bay watershed will be developed by 2020 than in 1980.

New estimates show that population is growing faster than predicted when the commission issued its report last year: a 20 percent increase in the next two decades, not three, in the bay watershed that includes the District and parts of Maryland, Virginia and Pennsylvania.

The campaign to restore the bay initially attacked pollution from sewage plants and factories. Only recently have officials and environmentalists taken aim at "nonpoint" pollution: the harder-to-control runoff contamination from the daily lives of city dwellers, suburbanites and farmers. States and localities are waging campaigns against dumping toxins into storm drains that empty into the bay, urging homeowners to use less fertilizer and tightening sediment-control rules at construction sites.

Maryland's 1984 Critical Areas law and Virginia's 1988 Chesapeake Bay Preservation Act were intended to control the effect of new shoreline development on water quality, not the broad issue of growth consequences throughout the bay watershed.

Maryland's law is beginning to take hold. The state commission supervising the law says more trees are being planted in critical areas, less land is being paved in the course of construction and developers are steering projects away from environmentally sensitive areas.

The Virginia law required 89 communities from Tidewater to Northern Virginia to submit plans by Sept. 20 for limiting construction on fragile land, but fewer than two dozen submitted plans on time and the law is in limbo because of a developer lawsuit.

Development is not yet the region's major cause of runoff pollution -- agriculture has that dubious honor. But the problems of growth will soon dominate, because farms are disappearing and development's pollution is inherently worse than agriculture's, according to experts guiding the bay cleanup campaign.

"We could manage a lot of other issues, but if we don't manage this major issue we won't be able to fully restore the bay," said Ann P. Swanson, executive director of the Chesapeake Bay Commission, which advises the state legislatures of Maryland, Virginia and Pennsylvania.

The 2020 Commission report last year went beyond land use planning into the delicate arena of social engineering. For the sake of the bay, it said, the District and Baltimore must become more attractive places to live, thus taking development pressure off more remote areas. The commission urged building more mass transit, locating workplaces near suburban homes to reduce car travel, and putting up housing the middle class can afford.

Sensitive to charges of unfairness to landowners, growth management advocates promote the idea of "transferable development rights." That lets a landowner in a no-growth area sell rights to build additional homes or square feet of commercial space to a landowner in an area where growth is allowed. The landowner makes money to compensate for his lowered property value, and the developer can build more than regulations normally would allow.

Maryland's Montgomery and Calvert counties already employ the technique, and Virginia is studying it. One example of how it was used: The 234-unit Solomons Landing condominium complex in Calvert County built extra units because developers bought building rights in Scientists' Cliffs, a small bay community that now will remain surrounded by open space.

The 2020 Commission's ideas drew general support when they were announced, but the specifics -- especially where development can occur and where it can't -- are likely to provoke fights. Some planners wonder whether Americans are willing to live in smaller houses, and there is considerable debate over whether the proposed Washington outer beltway would fit with the commission's ideas or promote runaway development.

"It's very different when you say, 'We believe in designating growth in suitable areas,' and when you go to a community and say, 'You are the designated suitable area,' " Swanson said.

Some rural counties fear they could be deprived of economic growth because of statewide controls pushed by already prosperous places such as Montgomery County. "Now that it's Charles County's turn to experience growth," said Murray Levy, a county commissioner, "our citizens have the same right to control their destiny."

Still, growth management has won some support. After years of fighting town houses, some environmentalists find themselves endorsing dense development because it uses land more efficiently. Some developers endorse growth management because they are fed up with uncertainty over where they may build.

Statewide growth management programs that limit local zoning powers and development of some rural areas have been installed in several states, including Florida, Oregon and Georgia.

Advocates say Maryland is more likely than the other states in the bay's watershed to adopt the 2020 Commission's ideas because its development control law set a precedent for state planning.

The recent local elections in Maryland sent a mixed message: Environmentalists take heart from the victory of slow-growth advocate Neal Potter as Montgomery County executive, but are concerned about the retirement of Anne Arundel Executive James Lighthizer, a growth management sympathizer. Howard County Executive Elizabeth Bobo, a growth management advocate who tried to walk the middle ground between residents and developers, was defeated by Charles Ecker, a relative political unknown.

Virginia has a more fierce tradition of local land use control. The vice chairman of Virginia's growth commission, state Sen. Joseph V. Gartlan Jr. (D-Mount Vernon), said if he were to propose a bill banning new sewage plants that did not fit growth plans, "I'd be laughed out of the General Assembly."

Virginia's growth management panel, appointed last year, was supposed to report this year but could not reach agreement and received a five-year extension from the legislature. But W. Tayloe Murphy Jr., the Democratic delegate who is its chairman, says he hopes to have concrete proposals by 1992.

The governor of Pennsylvania, after labeling some 2020 Commission recommendations "draconian," took the narrower step of asking state agencies to study how changes could be implemented without relaxing local land use control.

Some fear that the current economic slump could doom changes by making communities more desperate to court developers. But Swanson says the downturn will provide breathing room for debate before development pressure resumes.

"It's inevitable that growth will reach a level where people are willing to accept . . . almost anything to restrain and manage it," Gartlan said. "As painful as the cure might be, they know they have to do something about the disease."

NEXT: Getting farmers to do their part.