Bale construction I have seen is quite cost effective.
What I have seen is essentially a "pole barn" type construction, often steel beams. Then the straw bales are bulit up between the beams. The bales are used for the external walls, then more traditional framing is used inside. Simliar to log home construction.
The bales are tightly compressed, which makes them resistant to fire. I don't know about fire retardents. They are compressed densely so that there is no place for air infiltration. No air means no fire.
The outside is typically covered in chicken wire and stuckoed over, while the inside is then plastered.
Here in the west they offer a lot of benefits. In a wet climate I would imagine there would be some serious drawbacks due to moisture. If something happened and moisture got into the bales, it would take forever to dry (MOLD!!).
My opinion is that alternative materials and construction techniques are not used because of lack of knowledge by the builders and local inspectors. First, some alternatives require special knowledge to do it right. Finding a builder that can do the job is difficult or impossible in many areas. Then even if you can get the work done, the local codes inspectors may not have the knowledge about the materials and will be very reluctant to allow the construction to go on. Put these two together and you create a very high barrier to alternative construction and all but the most determined people will pursue these options. Of course this leads to significant costs in construction