OASIS, Calif. — Signs of once grandiose dreams dot the shoreline of the Salton Sea, dried up like the dead fish that bob ashore from time to time. This lake, the largest in California, was once supposed to be the Riviera of the West, a playground for stars like Frank Sinatra, Jerry Lewis and Desi Arnaz.


But the Salton Sea, created by accident 40 miles south of Palm Springs, has been shrinking for decades now, while the saline content continues to rise — it is roughly 50 percent saltier than the Pacific Ocean. Waterfront homes built more than a generation ago sit abandoned and boarded up, on a labyrinth of streets where only a couple of houses on each block are occupied.


But California does not give up easily on its dreams, so yet another ambitious development is poised to rise beside this vanishing sea.


Government officials have approved plans for a town that would eventually grow to nearly 40,000 people, with enough businesses and jobs to support the residents. Supporters of the project say it is the most sustainable development being planned in the state, but the town, known as Travertine Point, would be more than 20 miles from any existing town.


In many ways, the project is a sign of the state’s insatiable appetite for new development, even in Riverside County, east of Los Angeles, which has struggled through the building bust and foreclosure crisis. This might be among the most unlikely places in the county to contemplate a superdevelopment, but officials are unabashed in their enthusiasm and say the optimism is firmly grounded in reality.


“Recreational bodies of water don’t stay unoccupied forever,” said John Benoit, the Riverside County supervisor who represents the area and pushed for the project’s approval. “You can either take development piecemeal as it comes, or invest in something that is really taking the long-term view of creating comprehensive, unprecedented development.”


But environmental advocates have cried foul, filing a lawsuit in state court claiming that the project will irreparably harm the natural resources in the area. More than that, they say, the idea is just plain absurd.


“It’s one of the greatest examples of dumb growth you could possibly conjure up,” said Adam Keats, a staff lawyer at the Center for Biological Diversity, which with the Sierra Club is suing to stop the project. “It’s located very far away from the rest of civilization in a place that is very difficult to live. The notion that this could be a Shangri-La is something we should have given up a long time ago.”


The developers, Federated Insurance, based in Milwaukee, dismiss such criticism as misplaced and unimaginative.


The plans call for 16,000 homes and five million square feet of commercial space, along with parks lining streets with low speed limits. The approved plans say a minimum number of jobs must be created for each phase.


Paul Quill, who is managing the project, argues that this is the most sustainable project that has ever been built in the area. “We’re not talking about just putting up a bunch of houses and walking away,” he said.


The streets are designed to be walkable. Even in triple-digit temperatures here, Mr. Quill said, people are willing to step outside in the morning and evening. There are plans for affordable housing as well as high-priced sprawling homes that will be marketed to executives who work in the geothermal industry just to the south.


Developers acknowledge that it will be decades before the plans are completed and say they do not intend to break ground for at least three years, when they hope the housing market and the local economy are showing signs of improvement. But they say they need approvals as soon as they can get them so the land’s value will increase.


“Everyone looks at this sea as a problem, not a resource,” Mr. Quill said. “But it could provide an opportunity economically and environmentally because it’s not the dead sea everyone talks about.”


Although Mr. Quill has lived in the area for more than 20 years, his first time in the lake was last year, when a friend took him kayaking. “We have mountain views, we have sea views, all kinds of access to walking and hiking and biking and off-roading,” he said. “There’s so many things that are going to attract people here.”