Straw Bale
Building with straw bales is not a new idea, but was essentially not practiced at all until it had a revival in the 1970s. Straw bales are produced by the same baling machine that makes hay bales, but contain only the stalk of the grass, not the nutritious top part of the plant, and are typically produced after the grain (or hay) has already been harvested. Straw is considered a waste material, although this may be more due to the fertilizer intensive industrial style of agriculture than an inherent property as many organic farmers will till crop residue back into the soil to restore nutrients and maintain the "airy" nature of the soil. Even if straw isn't really a waste product, it seems likely that some of it (possibly even a large percentage of it) could be harvested as bales by using other waste organic material to enhance the soil.1 If no-till farming is ever widely adopted, it may turn this question further on it end.2 Objective comparisons of the relative environmental impact of strawbale are lacking.
In addition to using a waste product, straw bale walls insulate quite well (at least R30)3, and the thick wave walls have an organic feel that is appealing to many and hard to duplicate any other way. Unfortunately, bale walls achieve their durability by using an amazing amount of cement stucco (mixed with lime, so its breathable) - a product that requires massive amounts of energy to produce. It is also possible to use earth or lime plaster, which are much better environmental choices, but not as strong, and not as durable.
The concerns about the strength, durability, issues with bugs and fire are mostly unfounded, although water is a primary concern as moisture will damage straw much faster than wood (due to greater access to air in the bale). The rule of thumb is that bale houses, have a "good hat, and boots", meaning generous overhangs, and bales well up off the ground. Bale houses have been built in wet climates (Western Washington, Quebec), but doing so is more of a challenge. Unlike typical stucco where a layer of building paper or another equivalent drainage plane is installed behind the stucco, in strawbale there is no water barrier behind the stucco, so if it gets cracks in it, you can't ignore them.
Strawbale buildings come in two basic varieties: load bearing, in which the bales hold up the roof, and non-load bearing, in which a post-and-beam structure holds up the roof. In either case, the bales are stacked like bricks, and then finished inside and out with a plaster of some sort, either a cement stucco, a lime plaster stucco or an earthen plaster. For load bearing structures, the bales are heavily compressed before applying the stucco. In spite of this compression, over time the roof load tends to transfer to the rigid stucco. Load bearing strawbale buildings are generally restricted to areas with low lateral and snow loads. In both system the lateral loading (sideways, typically shaking force applied to the walls by wind gusts or earthquakes is also taken by the stucco. Since the stucco is brittle, any force applied to the wall that is large enough to cause movement (beyond the small amount the stucco can tolerate) will result in cracks in the stucco, greatly reducing its strength. Because of this, in areas with significant lateral (sideways) loading, it is common to build only non-load bearing structures.
Since bales come in two sizes: "two string" and "three string". The actual dimension varies somewhat depending on the baler used. Two string bales are generally 18 thick, 14-16" high, and 32-39" long. Three string bales are 24" thick, 16" high, and 42-48" long. Because these create very thick walls, the designer must be aware of the space they take up in placement of windows and doors, especially near inside corners. Complex exterior shapes can be very problematic, and so straw bale buildings tend to be simple. When small bump-outs or large areas of glass are desired, that part is often done as stick-frame. Although it is possible to modify a bale before using it, doing so is tedious and results in a much less compressed bale, so designers will usually try to lay out the floor plan to allow for as many whole bales to be used as possible. This could involve either making the dimension of the house be divisible into whole bales, or in the case of non-load bearing structures, making the posts on four foot centers so bales fit between them.
Bale homes have very deep window sills. In most climates it is best to locate windows to the outside of the bale so as to minimize any exterior sill where water might collect. Doors can be located on either surface, since there is only ground under the door sill. Both window and door liners can be either perpendicular to the window (which is the easiest to build), or can be at an angle which will allow more light to come in.
A significant issue for strawbale is keeping the bales dry, both during construction and for the life of the structure. Although wood is also susceptible to rot, straw has a much greater surface area exposed to the air, and hence will rot dramatically faster than wood. Because of this low tolerance for moisture, bale wall are usually built to be much more permeable than stick frame walls. This generally means that large overhangs much be used to keep rain off the structure, as stucco is fairly absorbent. These overhangs may reduce both the potential for solar gain, and the ability to amount of light that comes in the windows. Many of the recent straw bale buildings are in hot dry climates where these limitations aren't a problem.
Bale walls were once advertised as having an R-value of 50, but the currently accepted figure is more like 30, which is the equivalent to about an 8-9" insulated stick frame wall. Non-load bearing bale structures are typically a wood post and beam, but steel is also used. The posts can either be solid wood, or constructed box columns made of smaller dimensioned wood (2x4s or 2x6s) on two sides and plywood on the other two. Because the inside of a bale wall is plastered, there is a significant amount of added thermal mass-- typically less than would be needed for a fully passive solar house, but still a sizeable contribution (how much? look this up...)
At the present time (2013), there is not one, or even two standard ways to build with bales even if you restrict yourself to the more common non-load bearing variety. There are different kinds of posts that are used, and different ways to integrate those posts in with the bales. As time goes on, its is likely that some kind of standard will evolve, at least regionally: until then don't expect to look up how to build with bales and find one way to do it.
Strawbale building are generally "vapor open", meaning that both the inside and outside have perm ratings of greater than 1. This allows the wall to dry if any moisture does get in, it unfortunately also allows the wall to get wet, particularly by solar driven water. When this is a factor, builders use a breathable sealer on the stucco at least on the lower half of the south wall.
Although conceptually simple, straw bale buildings are not nearly as easy to build as they are sometimes made out to be, nor do they necessarily save much wood (you save wall sheathing, but otherwise use larger top plate material, and a bunch of other framing material). The difficulty in building is largely determined by the potential wind, earthquake and snow loads. Because straw is squishy and the stucco skin is rigid, the skin ends up carrying all the load unless you add other structure, which engineers do when the loading starts getting high.
The conventional wisdom is that it is possible to build a bale house quite cheaply, and unfortunately this isn't the case. The exterior skin of the house typically only accounts for 15% of the total cost of the house, so unless you're planning on doing most everything yourself and keeping the quantity of finish details to a minimum, you'll find that bale houses usually cost the same as standard construction.
Summary: straw bale has a real learning curve, and if done by a contractor can easily cost more than other wall systems. It creates a high R-value wall with low infiltration amounts (especially since the outside is usually stucco), and a very lovely building. Condensation is a huge fear in strawbale, but it often is less a problem than its made out to be--provided, of course, that the builder is careful to avoid problems. The very thick walls can be a problem for small urban lots.
Notes
1: Since I've yet to find an organic farmer to ask, I don't know how much of a big deal this is.
2: Farming appears to be in the middle of a similar upheaval as building is, and like green building, farming is applying a combination of older farming methods with newer ones. No-till farming is even rarer than organic farming, and unless I happen to run across a knowledgeable resource, the question will remain unanswered. In the meantime, as long as 99% of our grain is produced with chemical fertilizers, the straw will be continued to be a waste product, and hence straw bale buildings will be a good option in some regions.
3: the Oak Ridge lab test that rated the bales at R30 also gave much lower values for standard 2x4 and 2x6 wall assemblies (R10 & R15). To get R30 with more standard walls you'd need a 2x6 wall with 4" of rigid or a minimum 9" thick double wall. The bale community still tends to think of bales as being closer to the originally stated R50. What the truth is just isn't clear