This isn't really true any longer. Desalinating seawater costs about $1 per 1000 liters. You need a relatively prosperous country to be able to afford that, of course, but an industrialized economy with reasonable levels of corruption is perfectly capable of desalinating enough water to make civilization work.
It's practically tautological that there's limits to population size in a finite world, and that growth cannot be infinite in a finite universe. But I think people often frame this question the wrong way. It's a bit of a straw man.
Economic growth is proportional to the amount of problems solved that humans care about. And the cost of the solution, of course, in terms of human effort. It isn't necessarily proportional to the amount of physical resources consumed or bound. It's a reasonable assumption that there's generally a positive correlation, but the function and coefficients don't have to be linear. That leaves a lot of headroom.
People should rather think about infinite (arbitrary!!) economic growth in terms of what can be done to make the lives of humans better, on average. Even in the Western world, we are so far away from the hedonistic limits that it's ridiculous. It's trivial to imagine a world with no illness, perfect health, indefinite lifespan, very high freedom and low repression, no seriously bothersome and mandatory chores for anyone and so on. What can be done to get closer to such a world? So much.
The limit isn't defined by how polluting our cars can be, or how much beef we're able to produce. Many of these arguments collapse into the completely unimaginative.