Midwestern states are running out or prison space, according to the Midwestern Legislative Conference of the Council of State Governments in Lombard, Ill. The conference surveyed prisons in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North and South Dakota, Ohio and Wisconsin and concluded that the prison populations will continue to grow at a rapid clip unless radical action is taken. The conference projects only North Dakota will have adequate prison space by 1990. Now, only Iowa, Missouri and North Dakota have an adequate number of prison beds. Conference spokesman David Ensign said alternatives to incarceration, such as alternative sentencing, house arrest, shock probation, intensive supervision programs and community corrections--are all more economical than building new prisons.