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Dear Friends:

The years 2000 and 2001 were innovative and exciting ones for theWorldwatch Institute. As we moved forward with new research, communi-cations, and publishing initiatives, we were also reminded of why we cometo work each day. The events of September 11 and beyond made clear thatglobal trends could spiral out of control unless the world is successful in cre-ating a more stable and sustainable global society.

Meeting basic human needs, slowing the unprecedented growth in human numbers, and protecting vitalnatural resources such as water, forests, and fisheries are all prerequisites to healthy, secure societies. By build-ing a worldwide constituency of people dedicated to achieving these goals—and working together to solveproblems—we believe that we can contribute to global security.

Well before September, we had begun to reorient our work with an eye toward ensuring greater strategic impact. Institute research, for example, has become more targeted: our annual State of the Worldreport, then in its 19th year, was aimed for the first time at a specific event, the World Summit on Sustain-able Development in Johannesburg. This special World Summit edition offers policy prescriptions meant tonudge world leaders toward concrete commitments on the most important issues of our time.

Similarly, the Institute’s outreach efforts are being aimed at achieving policy change as we focus on devel-oping new strategic partnerships—for example in Brazil, where we are working with the Open University ofthe Atlantic Forest to publish and distribute the Institute’s publications to a broad audience, including leadersin government, business, and the non-profit sector. We are now seeking similar partnerships in other largecountries.

We have also sought during the past two years to find new ways to communicate with our friends andsupporters around the world. This report, the first in what we plan to be an annual series, is intended to fur-ther that effort. We hope that you find it interesting and useful, and that you will let us know your thoughtsabout Worldwatch and its work.

We look forward to working with you in the quest for a sustainable future.

Christopher FlavinPresident

FROM THE PRESIDENT’S DESK

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ABOUT THE INSTITUTE

Founded by Lester Brown in 1974, Worldwatch offers a unique blend of interdisciplinary research, global focus, and accessible writing that has made it a leading source of information on the interactions among globalenvironmental, social, and economic trends. The Institute’s work revolves around the transition to an environ-mentally sustainable and just society—and on how to achieve it. Non-partisan and independent, the Institute’sresearch is funded primarily by donations from private foundations and individuals. Nearly one-third of ourbudget is provided by publication sales.

The credibility and accessibility of Worldwatch research have made the Institute’s publications popularamong a cross-section of society, from government and business decisionmakers to the media, students, andthe general public. Since the first Worldwatch paper was published in 1975, the Institute has broadened dis-cussion of environmental and social issues by analyzing them from a global and interdisciplinary perspective.This has produced fresh angles on the issues of the day whether they be in the headlines or not. For example,the Institute has:

◆ documented the economic value of “nature’s services” such as pollination and water filtration;

◆ advanced a broadened concept of malnutrition to include problems associated with overweight as well as underweight;

◆ detailed the steps needed not just to curb energy-related pollution, but to move beyond fossil fuels to asolar-hydrogen economy; and

◆ provided a clear plan of action for ensuring environmental sustainability in the face of a rapidlyglobalizing economy.

Worldwatch entered the 21st century with a new President and a strengthened staff and Board of Directors—along with a new commitment to providing the information and ideas needed to foster a sustainable world. Among our immediate strategic priorities:

Greater focus on solutions. Individuals and societies are hard pressed to abandon unsustainable lifestyles andeconomies if they lack a clear understanding of alternatives. Recognizing this, the Institute will focus in com-ing years on articulating solutions to the world’s social and environmental problems.

Increased use of the Internet to disseminate Institute research. The Institute is steadily expanding the roleof the World Wide Web and e-mail in distributing its work to audiences around the globe, increasing theusability and breadth of our on-line information.

Strategically target research and outreach. Worldwatch is working to combine publications and outreach activities in a way that shapes important global decisions. In 2000 and 2001, we hosteda series of events for decisionmakers, including top officials such as the United Nations Under-Secretary Gen-eral, the European Union’s Commissioner for the Environment, the Chairman of the White House Councilon Environmental Quality, and the Ambassadors of Brazil and South Africa to the United States.

Expand the Institute’s Global Connections. Worldwatch is building on its network of publishing contracts and relationships around the world by establishing strategic partnerships and by adding Board and

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staff members from a range of countries. We have begun by focusing on the eight countries and one regionthat dominate global environmental trends: Brazil, China, India, Indonesia, Japan, Russia, South Africa, the United States, and the European Union.

Publications and Resources

Publishing is the backbone of Worldwatch’s efforts to raise public awareness of the critical issues facing ourcivilization. Over the years, the Institute’s stable of publications has expanded from a set of research mono-graphs to a comprehensive library of print and electronic resources, including:

◆ State of the World and Vital Signs, two flagship annuals that are published in over 20 different languages;

◆ Worldwatch Papers, an annual series of in-depth research reports on topics that are making—or areabout to make—headlines worldwide;

◆ WORLD WATCH, an award-winning bi-monthly magazine;

◆ Worldwatch CD-ROM, an electronic, fully searchable resource that includes datasets of dozens of environmental indicators as well as the full text of both flagship annuals;

◆ Worldwatch News Briefs, short topical reports distributed by e-mail and fax;

◆ www.worldwatch.org, the Institute’s website.

In 2001, our publications strategy focused on strengthening the Institute’s leading information resources—State of the World, Vital Signs, WORLD WATCH magazine, and the Worldwatch CD-ROM—to make them moreuseful to people around the world.

State of the World

Our flagship publication, State of the World, is the Institute’s most powerful tool for presenting Worldwatchresearch. It is translated into dozens of languages, used in many college and university courses, and covered extensively by media worldwide.

Innovations in the 2002 State of the World give it greaterauthority and strategic relevance, and make it morereadable and accessible:

◆ The book is aimed at a key global policymakingevent: the World Summit on Sustainable Devel-opment, held in August 2002 in Johannesburg.

◆ It features a Foreword by UN Secretary GeneralKofi Annan—the first luminary from outside theInstitute ever to write for the book.

◆ Chapters conclude with a World Summit Priorities textbox designed to call Summit lead-ers’ attention to the global environmental andsocial issues in greatest need of action.

State of the World: A Credible and ReliableSource for the Media

Worldwatch researchers conducted more than 30interviews on State of the World 2002 with the BBC,C-SPAN, CNN International, CNN Spanish, Voice ofAmerica, and NPR, as well as AP, UPI, and othermajor wire services.

On the Internet, the book was featured prominently onNational Geographic Online, WashingtonPost.com,New York Times, BBC News Online, and ABC News.

The official website for the World Summit on Sustainable Development featured the book as part of its effort to draw attention to the Summit.

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Vital Signs

An easy-to-use desktop reference featuring data on more than 50 key global indicators of sustainability, Vital Signs was developed in 1992 to complement the research in State of the World. Succinct analysis, graphs,and tables of diverse global indicators—from bicycle production to world grain production—make the bookpopular among those who need quick access to data on keyglobal trends.

Changes introduced in the 2001 volume make Vital Signsmore interesting and useful than ever:

◆ Call-out boxes link one indicator to another, helpingthe reader to understand connections across topics.

◆ The Introduction is written thematically, a departurefrom the traditional summary of the book’s indicators.

◆ Each section of the book begins with a photograph—a first in Vital Signs—and a list of the indicators fea-tured in that section.

Vital Signs: Providing Key Indicators of

Long-Term Trends

Project Director Michael Renner launched Vital Signsat a World Environment Day celebration at the UnitedNations. The event was co-hosted by the UnitedNations Environment Programme, the Rene DubosCenter, and the Global Policy Forum.

Vital Signs interviews were conducted by radio stations in New York, San Francisco, Los Angeles,Tampa, Portland, Columbus, and Houston; and byUnited Nations Radio, CBS Radio, and Mittel-deutscher Rundfunk (Germany).

According to the World Health Organization, 1.1 billion people were not able to meet their needs forsafe water in 2000. From “Hydrological Poverty Worsening,” Vital Signs 2001.

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WORLD WATCH Magazine

Our bimonthly magazine, now in its 13th year, has won the Alternative Press Award for investigative journal-ism, the Project Censored Award, and a number of Utne Reader awards. It has earned a reputation for clearwriting and cogent analysis, as well as integrity: the magazine does not accept commercial advertising.

WORLD WATCH introduced a number of innovationsin 2001 designed to give it greater attention and impact:

◆ Guest authors included Mikhail Gorbachev,Anne and Paul Ehrlich, Arundhati Roy, andWendell Berry.

◆ New article formats, including interviews andmini-reviews of new books, made importantinformation more accessible and easy to digest.

◆ Features placed increased importance on solu-tions. The article “The Restoration of aHotspot Begins,” for example, documents howthe degradation of the Atlantic Rainforest ofBrazil can be reversed, and true restorationachieved.

◆ In 2001, a contract was signed to create aFrench-language online edition of WorldWatch, based in Geneva, Switzerland. It iscalled L’Etat de la Planete magazine and waslaunched in May 2002.

Worldwatch CD-ROM

In 2001, the Worldwatch Database was incorporated into a new Worldwatch CD-ROM. The improved elec-tronic product includes expanded datasets, and features colorful layouts, interactive software, and links to theInstitute’s website. Other highlights of the new CD include:

◆ The full text of State of the World 2001 and Vital Signs 2001, including figures and tables, as well asselected data from Worldwatch Papers and WORLD WATCH magazine.

◆ A search engine that allows readers to find information quickly, links that help readers to navigateeasily within the reports, and citations containing links to relevant Internet web sites.

◆ Color graphics, created especially for this CD, that are linked to spreadsheets, and that allow readersto create their own presentations.

Worldwatch publications and products are available from the Worldwatch website, www.worldwatch.org, most at nocharge. For a list of publishing partners outside the United States, visit www.worldwatch.org/foreign/ index.html.

WORLD WATCH: Inspiring the World Around Us

A workshop on genetically engineered food organ-ized by the Interfaith Council on Corporate Respon-sibility used Brian Halweil’s “Organic Gold Rush”(May/June 2001) as a background document. Theforum summary called it “indispensable” and some-thing that “should be read by everyone.”

Payal Sampat’s “Last Words: The Dying of Languages” (May/June 2001) resonated with editorial desks worldwide—leading to stories onBBC World Service, Voice of America, All-IndiaRadio, and National Public Radio, as well as in some600 newspapers. AP’s web coverage included anaudio recording of an Alaskan featured in the articlewho is the last living speaker of Eyak.

A producer at National Geographic called Senior Editor Chris Bright to discuss the possibility of a TVshow based on his articles,“The Restoration of aHotspot” and “Chocolate Could Bring the ForestBack” (November/December 2001).

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Research Highlights

Worldwatch research covers virtually all facets of sustainable development, from the loss of forests to the gen-eration of wind energy. Our research is divided into four broad areas—energy, economy, nature, and people—each of which saw new and innovative contributions by Institute researchers.

The world’s energy and materials economy, based heavily on fossil fuels, is a majorforce altering the Earth’s atmosphere and warming the climate. Since the Institute’sfounding, Worldwatch researchers have raised warning flags about the effects of con-tinued dependence on fossil fuels. In recent years, Institute research has explored thebest route to sustainable energy, materials, and transportation systems.

The Worldwatch vision for a sustainable energy economy was further developed in2001 in Worldwatch Paper 157, Hydrogen Futures, by Seth Dunn. Hydrogen

Futures makes the case that a “hydrogeneconomy” is within reach. Propelled in partby advances in fuel cell technology, thevision of economies fueled by hydrogen—the most abundant element in the universe—is capturing the imagination ofscientists, engineers, politicians, and envi-ronmentalists worldwide. Hydrogen Futurestakes the reader through the steps neededto make the hydrogen economy a reality.

In addition to interviews for the BBC,Financial Times, Fortune, Nikkei, WashingtonPost, and Xinhua, author Seth Dunn wasinvited to present the paper at five confer-ences in the fall of 2002. Dunn’s work was acritical success as well. The chair of theU.S. Department of Energy’s HydrogenTechnical Advisory Panel described it as “athorough, insightful, and extremely timelyreport.”

In a sustainable world, the economic challenge is to provide a dignified life for allpeople, without stressing the natural environment. Worldwatch researchers cover-ing economic issues keep one eye on the natural world and the other on humanwellbeing—especially the wellbeing of the poorest of the human family. Ourresearch also draws the connections between environmental health and economicperformance.

Worldwatch Paper 155, Still Waiting for the Jubilee, by David Roodman, published in 2001, points to a “third way on third world debt,” critically

Energy climate change, materials, transportation, energy

Economyconsumption, globalization andgovernance,security, sustain-able economics,information technology

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analyzing both the practices of leading creditors and the calls by NGOsand others for cancellation of much of the debt. Roodman identifiesflaws inherent in today’s structure of official lending, and proposes waysto correct them.

Still Waiting generated interviews with NPR, BBC World Service, UNRadio, and other media from around the globe. It also prompted criticalpraise from Roy Culpeper, President of the North-South Institute inOttawa, and from Nancy Birdsall, President of the Center for GlobalDevelopment in Washington.

Another addition to our economics research was Worldwatch Paper159, Traveling Light, by Lisa Mastny. The paper looks at the boom inglobal tourism since 1950, analyzing its environmental impact and itsrole as an engine of development. Traveling Light also examines the hopeand hype of eco-tourism—which by one estimate is growing nearly threetimes as fast as tourism in general—and makes recommendations forbuilding a tourism industry that treads lightly on the planet.

Traveling Light helped the Institute to establish itself as a pacesetter onthis topic. Author Lisa Mastny was interviewed on the BBC, CBSNews, NPR’s Marketplace, Voice of America, UN Radio, and Worldnet TV, among others. Several journalistsfrom India, Mexico, and Thailand reported using the paper in their efforts to raise awareness of concernsregarding tourism. The paper has also reached the tourism industry. The President of the Colorado-basedAdventure Travel Society wrote to colleagues that the paper “is a very good overview of the effects and bene-fits of tourism,” while tour operators in several countries requested copies.

In 2001 Worldwatch launched its Global Governance project, an initiative that parlays the Institute'sresearch regarding international treaties, institutions, and other aspects of global governance into an effectivevehicle for policy development. Senior Researcher Hilary French, with 14 years at the Institute researchinggovernance and environmental issues, was named Project Director. Together with staff researcher Lisa Mastny, French wrote “Controlling International Environmental Crime,” for State of the World 2001, whichdocuments the illegal trade and treaty violations that undermine international efforts to protect the naturalenvironment.

The natural world is the foundation of all economic activity, yet this funda-mental truth is regularly overlooked, even by elites making key economicdecisions. Worldwatch research makes the connections between environmen-tal and economic health, as a way of convincing leaders and the public of theneed to integrate thinking and policymaking in the two areas.

The environmental and economic connection was strikingly illustrated in2001 in Worldwatch Paper 158, Unnatural Disasters, by Janet Abramovitz.

Unnatural Disasters documents the role of human activities in creating or worsening many of today’s hurri-canes, floods, and fires. Such catastrophes caused more economic loss in the 1990s than in the previous fourdecades combined. Ecologically destructive practices such as engineering rivers, filling wetlands, and burning

Nature freshwater ecosystems,forests, oceans, disease, species, natural disasters, bioinvasion, pollution

“ . . . some financiers are promoting ‘sustain-ability investing,’ which encourages a positive approach to investing by targetingcompanies that are deemed leaders ratherthan laggards on environmental and socialissues.” From “Socially Responsible Invest-ing Surges,” Vital Signs 2001.

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fossil fuels, combined with migration to cities and coastalareas—the focal points of many modern disasters—are put-ting more and more people and infrastructure at risk.

Unnatural Disasters was launched at a press briefing that fea-tured special comments by James Lee Witt, Director of theFederal Emergency Management Agency during the Clintonadministration, and garnered extensive press coverage. Inaddition, the paper was used as a background document tolaunch a Task Force on Climate Change, Adaptation, andVulnerable Communities, sponsored by the World Conserva-tion Union and the International Institute for SustainableDevelopment, whose members gave the paper strongly posi-tive reviews.

“Human beings are at the center ofconcerns for sustainable develop-ment,” declares the Rio Declarationon environment and developmentthat emerged from the 1992 EarthSummit. But too often, unsustainable

agricultural practices, urbanization, and population growth jeopardize the prospects for building a sustainablecivilization. Researchers at Worldwatch are working to show more sustainable approaches to food production,water conservation, human settlements, and gender relations.

How we build human settlements is an important facet of this research effort, and is the focus of Worldwatch Paper 156, City Limits, by Molly O’Meara Sheehan. City Limits finds that car-centric cities

harm economic productivity, increase social inequities, and damagehuman and environmental health on every continent. Drawing onsuccess stories from Copenhagen, Portland, and Curitiba, the paperidentifies ways in which citizens, government officials, and businessleaders can build political support and markets for better publicspaces and transportation choices.

City Limits generated media interest from the Washington Post,Reuters (Latin America), Kyodo News (Japan), andFrankfurter Rundschau (Germany). A journalist writing a book onsprawl described it as “brilliant.” And Rick Rybeck of Washington,DC’s Department of Public Works wrote to author Molly Sheehan,“Your discussions are clear and compelling. . . . We will mine yourreport for its many good ideas.”

Peoplepopulation,urbanization,food, water

For more information about the full extent of the Worldwatch research program, visit www.worldwatch.org/topics.

Photograph of Hanalei Valley Taro in Hawaii courtesy of Michael Stewart.

Some 50,000 Indians leave annually to live, work, or study in the UnitedStates, Canada, Australia, or the United Kingdom. From “Migrants andRefugees on the Move,” Vital Signs 2001.

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Reaching Out to Create Change

Our effort to boost the Institute’s effectiveness has led Worldwatch staff to reach out and engage the worldmore aggressively than ever. In 2001, this effort had three principle thrusts: cultivating strategic partnerships,taking our message to influential audiences, and inserting authoritative Worldwatch messages into the dailyclamor of the global media.

Cultivating Partners

Worldwatch leveraged its influence on a range of issues in 2001 by establishing working partnerships withorganizations worldwide. The result in each case was a stronger contribution to the cause of sustainability. For example,

◆ In Brazil, senior researcher Chris Bright is workingwith our local partner, the Universidade Livre deMata Atlantica, to explore ways to protect Brazil’srapidly disappearing and biologically-rich AtlanticForest via innovative agro-forestry techniquesinvolving cocoa cultivation. Worldwatch has dis-cussed some of its ideas with members of CEPLAC,the Brazilian cocoa growers industry group, and aimsto pursue this dialogue in the future.

◆ In the United States, we joined other environmen-tal organizations in working on the Mining Cam-paign, an effort to look at mining’s destructive socialand ecological impacts and to make a strong case for reforms in the international mining industry.Worldwatch is one of the few organizations in theCampaign looking at alternatives to traditional mining practices.

◆ Hilary French, Director of the Institute’s Global Governance Project, was one of “sixteen eminentactivists, politicians, intellectuals, and managersfrom around the world,” named to the HeinrichBoell Foundation’s Rio + 10 Memorandum Group.Created to produce recommendations for the WorldSummit on Sustainable Development, the Groupmet in Berlin, New York, Rio de Janeiro, and Johan-nesburg to develop a far-reaching set of goals forpresentation to leading UN and government offi-cials from around the world.

Worldwatch researchers Brian Halweil (left) andErik Assadourian at work in the community garden in Washington, DC that Brian inauguratedin 2000. The garden is all-organic and featuresstrawberry bush, native irises, eastern red bud,and other plants native to the Potomac Riverwatershed. The garden, which includes a benchand mural painted by local school children, servesthe Adams Morgan community and replaced apreviously trash-filled lot that was neck-high inweeds, bordered by walls tagged by graffiti, andhome to the occasional discarded sofa.

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Taking Our Message on the Road

In 2000 and 2001, the Institute organized a number of events in which a team of Worldwatch researchers pre-sented its ideas to a wide array of local audiences. In addition to our annual State of the World briefing inWashington, we held similar briefings in Aspen, San Francisco, and Boston, working with co-sponsors thatincluded the Sopris Foundation, the Packard Foundation, and the New England Coalition for SustainablePopulation.

We also sent researchers on more specialized missions. In April, Worldwatch researchers Michael Renner,Seth Dunn, and Molly O’Meara Sheehan traveled to New York for a press briefing on energy and transporta-tion issues at meetings of the UN’s Commission for Sustainable Development (CSD-9).

Using the Media Nimbly and Effectively

Long an important tool in Worldwatch outreach, engaging the media took on more strategic dimensions in2001 as the Institute’s Communications staff developed short, timely news briefs designed to capitalize onbreaking news, or to anticipate and shape coverage of anniversaries, holidays, and other foreseeable events.Topics covered included toxic chemicals, the Kyoto Protocol, and food safety.

2001 International Publishing Program

Worldwatch works with overseas publishers to translate, edit, produce, sell, and market our books, papers, andmagazine. As of December 2001, we have arranged for more than 30 different editions of our products to bepublished and distributed around the world.

English

English

KannadaVietnamese

IndonesianPortuguese

Portuguese

Basque

English

Hebrew

Spanish

CatalanFrench

Persian

GeorgianTurkish

GreekItalian

SwedishFinnishNorwegian

Danish

Dutch

Estonian

Chinese

Russian

JapaneseKorean

Tamil

Arabic

German

SlovakianHungarianUkrainianSlovenianRomanianBulgarian

PolishCzech

Chinese

English

English

Countries and languages where Worldwatch products have been published and distributed.

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2000 FINANCIAL STATEMENT

Worldwatch InstituteCondensed Statement of Activities and Changes in Net AssetsYear Ended December 31, 2000

Revenues and Additions to Net Assets

Contributions and Grants:Unrestricted $1,653,114Restricted 1,783,929

Total Contributions and Grants $3,437,043

Total Publications Income $1,186,079

Investment and Other Income 164,092

Total Revenues and Additions $4,787,214

Expenses and Reductions to Net Assets

Program Services $3,019,441

Support Services:Management and General $1,364,303Fundraising 183,209

Total Support Services $1,547,512

Total Expenses and Reductions $4,566,953

Net Increase in Net Assets $220,261

The condensed consolidated financial information for the year ended December 31, 2000 has been derivedfrom the Worldwatch Institute's financial statements, audited by Walpert & Wolpoff, LLP, independent audi-tors. The condensed financial information should be read in conjunction with the 2000 audited financialstatements and related notes.

Worldwatch Institute's complete audited financial statements may be obtained by writing to the Treasurer,Worldwatch Institute, 1776 Massachusetts Avenue, NW, Washington, DC 20036.

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Worldwatch Institute Condensed Statement of Financial PositionDecember 31, 2000

Assets

Cash and Cash Equivalents $ 539,648Certificates of Deposit 2,146,426Short-term Investments 301,536Receivables, Unconditional Promises 845,887Receivables, World Watch Magazine 5,971Accounts Receivable, Other 40,122Publication Inventory 206,793Prepaid Expenses 59,929Charitable Unitrust, Investments Receivable 93,092Property and Equipment (Net of Accumulated

Depreciation of $710,276) 134,755

TOTAL ASSETS $4,374,159

Liabilities

Accounts Payable and Accrued Expense $159,284Deferred Revenue, Subscriptions and Publications 448,646Deferred Revenue, Conditional Contributions 20,000Deferred Lease Discount 69,537Capital Lease 71,529

TOTAL LIABILITIES $768,996

Net Assets

Unrestricted $2,223,234Temporarily Restricted 1,329,994Permanently Restricted 51,935

TOTAL NET ASSETS $3,605,163

TOTAL NET ASSETS AND LIABILITIES $4,374,159

The condensed consolidated financial information for the year ended December 31, 2000 has been derivedfrom the Worldwatch Institute's financial statements, audited by Walpert & Wolpoff, LLP, independent audi-tors. The condensed financial information should be read in conjunction with the 2000 auditedfinancial statements and related notes.

Worldwatch Institute's complete audited financial statements may be obtained by writing to the Treasurer,Worldwatch Institute, 1776 Massachusetts Avenue, NW, Washington, DC 20036.

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Worldwatch InstituteCondensed Statement of Activities and Changes in Net AssetsYear Ended December 31, 2001

Revenues and Additions to Net Assets

Contributions and Grants:Unrestricted $1,595,315Restricted 707,811

Total Contributions and Grants $2,303,126

Total Publications Income $907,061

Investment and Other Income $134,975

Total Revenues and Additions $3,345,162

Expenses and Reductions to Net Assets

Program Services $3,398,508

Support Services:Management and General $616,016Fundraising 457,749

Total Support Services $1,073,765

Total Expenses and Reductions $4,472,273

Net Decrease in Net Assets ($1,127,111)

The condensed consolidated financial information for the year ended December 31, 2001 has been derived from the Worldwatch Institute's financial statements, audited by Walpert & Wolpoff, LLP,independent auditors. The condensed financial information should be read in conjunction with the 2001audited financial statements and related notes.

Worldwatch Institute's complete audited financial statements may be obtained by writing to the Treasurer, Worldwatch Institute, 1776 Massachusetts Avenue, NW, Washington, DC 20036.

2001 FINANCIAL STATEMENT

Foundations(50%)

Individuals(15%)

Earned Income(35%)

Revenue

Programs(76%)

Managementand General

(14%)

Expenses

Fundraising(10%)

Due to timing of some large grants, the net decrease in net assets in 2001 is somewhat overstated and thenet increase in net assets in 2000 is also somewhat overstated.

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Worldwatch Institute Condensed Statement of Financial PositionDecember 31, 2001

Assets

Cash and Cash Equivalents $ 698,280Certificates of Deposit $ 873,405Short-term Investments 50,291Receivables, Unconditional Promises 1,053,143Receivables, World Watch Magazine 3,734Accounts Receivable, Other 60,593Publication Inventory 205,803Prepaid Expenses 65,047Charitable Unitrust, Investments Receivable 88,653Property and Equipment (Net of Accumulated

Depreciation of $752,334) 125,313

TOTAL ASSETS $3,224,262

Liabilities

Accounts Payable and Accrued Expense $203,500Deferred Revenue, Subscriptions and Publications 429,728Deferred Revenue, Conditional Contributions 35,000Deferred Lease Discount 31,866Capital Lease 46,116

TOTAL LIABILITIES $746,210

Net Assets

Unrestricted $1,922,504Temporarily Restricted 503,613Permanently Restricted 51,935

TOTAL NET ASSETS $2,478,052

TOTAL NET ASSETS AND LIABILITIES $3,224,262

The condensed consolidated financial information for the year ended December 31, 2001 has been derivedfrom the Worldwatch Institute's financial statements, audited by Walpert & Wolpoff, LLP, independent audi-tors. The condensed financial information should be read in conjunction with the 2001 auditedfinancial statements and related notes.

Worldwatch Institute's complete audited financial statements may be obtained by writing to the Treasurer,Worldwatch Institute, 1776 Massachusetts Avenue, NW, Washington, DC 20036.

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Worldwatch Staff — 2001

Board of Directors — 2001

Janet N. AbramovitzEd AyresRichard BellChris BrightLester R. BrownLori A. BrownNiki ClarkSuzanne CliftElizabeth DohertySeth DunnBarbara FallinChristopher Flavin

Hilary FrenchGary GardnerJoseph GravelyAdrianne GreenleesJonathan GuzmanBrian HalweilMillicent JohnsonReah Janise KauffmanSharon LapierJanet LarsenLisa MastnyAnne Platt McGinn

Leanne MitchellDanielle NierenbergElizabeth NolanKevin ParkerMary RedfernMichael RennerDavid Malin RoodmanCurtis RunyanPayal SampatMolly O. SheehanDenise Warden

Øystein Dahle (Chairman)

Andrew Rice (Secretary)

Tom Crain (Treasurer)

Adam Albright

Lester R. Brown

Cathy Crain

James Dehlsen

Christopher Flavin

Lynne Gallagher

Hazel Henderson

Hunter Lewis

Scott McVay

Larry Minear

Izaak van Melle

Wren Wirth

Orville L. Freeman (Emeritus)

Abderrahman Khene (Emeritus)

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Foundation SupportGeraldine R. Dodge FoundationFarview FoundationThe Ford FoundationRichard & Rhoda Goldman FundGoldman Environmental

FoundationHeinz FoundationWilliam and Flora Hewlett

FoundationW. Alton Jones Foundation

Lear FoundationSteve Leuthold Family FoundationMacArthur FoundationC. S. Mott FoundationMunson FoundationNew Horizon FoundationPackard FoundationPerdue FoundationShenandoah FoundationThe Summit Foundation

Surdna FoundationThe Thornton FoundationThe Turner FoundationUN Environment ProgrammeUN Population FundWallace Global FundWeeden FoundationWinslow Foundation

Dr. Ernst AbelinGrant AbertMyron ArmsDouglas & Debra BakerDaniel BarisWilliam & Carol BealeRussell BennettJohn BerminghamMichael & Ruth BerryDavid BlittersdorfRick BostWilliam BrachLester BrownJohn BuchananBlake CadyJohn M. Cart Sr.Dwight E. Collins PhDLillian CorleyAnn D. Corson (in

memory of Walter Corson)Christopher CronanJames D'AloisioHerman Daly PhDLois DauwayLincoln & Alice Day PhDRoberto C. DorionJunko EdahiroStanley & Anita

EisenbergKaran English

Christopher FlavinDavid ForsbergKarl Fossum MDMark FosterSteve FoxAlan FrenchCaroline GabelDavid Galin MDLynne GallagherCebrun GaustadKate GreswoldSara & Ed GroarkPaul GrowaldKent HealyHazel HendersonG. David & Barb HurdLaurie & Brian JoinerRobert E. JonesJens JunghansBetty KapetanakisDaniel KatzAbderrahman Khene PhDRobert KnoxJakob LagercrantzDianne Lathrop-LawMarta Jo LawrenceWilliam LaysonLen Lehmann PhDWilliam LeightyKlaus LeisingerKurt Leuthold

Hunter LewisLawrence LindenSusanne LloyJo LuckCatherine MacIntyre

WilliamsDr. Cortlandt MackenziePeter MatthiessenThe Mckernon GroupScott & Hella McVayCornelia MendenhallJames MooreLincoln & Mary

Louise Moses PhDPaul Myers & Welthy SoniJohn NewlinHachiro NittaDr. H.P. NooteboomSoki OdaDudley OrrJohn OsbergBill PaineMitzi PerdueBob Pettapiece PhDMr. Laughlin PhillipsRichard & Laura PrattWalt & Jeanne RattermanWilliam & Eleanor RevelleAndrew E. RiceWilliam RiellyLarry Rockefeller

Bill RogersJohn SchusterBronwyn ScottHarold SegelstadPeter SeidelRobert Shaw Jr.Barbara ShepardAkihisa ShigyoFrank & Grace SindenCurt SnyderMadeleine SoneAlbert Staton Jr.Nell Johnson StoneWilliam & Grace

Strickhouser Marian Stuart PhDGreg StudenWilliam Laney ThorntonJohn E. & Anna Marie

ThronThomas Tuxill MDJames Ulvestad PhDAbel ValeIzaak Van MelleJan VeltropRosemary WakehamRandall WallaceJennifer WeisenthalDouglas WilsonJames WoodfinSam Wright

Adam & Rachel AlbrightTom & Cathy Crain

James & Deanna DehlsenVicki & Roger Sant

Robert Wallace & Raisa ScriabineEckart Wintzen

Council of Sponsors

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W O R L D W A T C H I N S T I T U T E

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How You Can Help

The Worldwatch Institute is a 501(c)(3) nonprofit organization. We rely on gifts from individuals andfoundations to underwrite our efforts to provide the information and analysis needed to foster an envi-ronmentally sustainable society. You can help us in our efforts to lead the way in identifying threats topeople and the planet, and in recommending strategies for ensuring that the earth our children inheritwill be a healthy one.

We welcome your gifts to support our work. Contributions will be used to help Worldwatch produce itspathbreaking publications, broaden its outreach programs to decisionmakers, build relationships withinternational partners, and disseminate its vital information to as many people as possible through theInstitute’s website and publications.

To join our family of supporters, please call Adrianne Greenlees at (202) 452-1992, x518 or send yourtax-deductible donation to us in the mail to: 1776 Massachusetts Ave., NW, Washington, DC 20036.You can also donate online at www.worldwatch.org/donate.

Legacy for Sustainability

You can make a lasting contribution to a better future by remembering Worldwatch in your will, trust, orinsurance policy.

When you write or review your will, please consider leaving a charitable bequest. Ask your attorney toinclude such words as these:

“I give, devise or bequeath to the Worldwatch Institute, for its general purposes all (or statefraction) of the rest, residue or remainder of my estate, whether real or personal.”

OR

“I give to the Worldwatch Institute the sum of ___________ dollars to be used for the general purposesof the Institute.”

If you have already named the Institute in your will or have additional questions, please contact Adrianne Greenlees, Vice President for Development, at (202) 452-1992 x518, or e-mail toagreenlees@worldwatch.org.

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A N N U A L R E P O R T 2 0 0 0 / 2 0 0 1

For More Information

The Worldwatch website provides immediate access to the Institute’s latestpublications, information about researchers, all press releases since January1996, description of major research areas, and a bookstore. Please visit us atwww.worldwatch.org.

The website also provides information for signing up for regular e-mail updates on the latest developments at Worldwatch.

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Photograph of Akaka Falls in Hawaii courtesy of Michael Stewart.

O R L D WAT C HN S T I T U T EWIW 1776 Massachusetts Ave., NW

Washington, DC 20036www.worldwatch.org

We have worked since our inception a quarter ofa century ago to build an environmentally sustainable

world, a world more just, more equitable, and more peaceful than today’s world.

Meeting basic human needs, slowing the unprecedentedgrowth in human numbers, and protecting vital naturalresources such as fresh water, forests, and fisheries are

all prerequisites to healthy, stable societies.

. . . we go forward with an even deeper dedication to working for a peaceful and sustainable world.

Christopher FlavinWorldwatch Institute

11 September 2001