We discussed this before somewhere, and I cited Andrew Jefford's Peat Smoke And Spirit at the time. He cites an estimate of 5,000 years' worth on Islay, and world-wide sustainability of this "finite resource which renews itself only very slowly." "Globally, two-thirds of peat is burnt as fuel...and around a third used for horticulture; its use in whisky production is statistically insignificant." (p196) Remember, peat was used originally because it was the available fuel; now it is pretty much only a flavoring agent.
b_chris (and anyone else interested), Jefford's book is a must-read for anyone interested in whisky production generally, and in Islay in particular.