Theatres are now tiny and risk-taking or large and cautious. That's no good for art, argues playwright Donal O'Kelly. The solution is a third way that plays to the strengths of each type of venue, he suggests.

In Ireland in the past 10 years we have built a circuit of arts centres with 250 or more seats, arms out anxious to embrace the best of touring theatre. The centres, in places from Portlaoise to Letterkenny, have been heavily invested in by the Arts Council and by county councils. The logic was that, once built, they would be there permanently and, no matter what happened, would be facilities for touring theatre and other art forms.

Beneath this circuit is a new, parallel one of smaller, energetic venues with 100-200 seats that service local areas such as Tinahely, Manorhamilton, Charleville and Gortahork. Some subsidised by local councils, some self-funding, they stage the best of small-scale music gigs, classical, traditional and singer-songwriter acts and touring theatre.

The two circuits are not mutually exclusive. In fact, as a two-tier arts highway they are a destructive influence on the development of live touring theatre, an upholder of a kind of theatre apartheid. Let me explain why.

With the deplorable yet predictable downturn in arts funding, the larger touring venues have no room for risk-taking. They are being forced to accept only tried-and-trusted formulas in their already limited theatre-slot weeks: John B. Keane, again and again and again, and lightweight comedy with television stars. It's economically understandable, but economics doesn't give the full picture. We need to look with an ecologist's vision.

It's a bit like the discredited World Bank and International Monetary Fund policies of the 1970s and 1980s, when indebted countries were forced into monocultural cash-crop production on an enormous scale, with tragic consequences for those societies on a whole range of issues, not least having no food-production safety net if market prices slumped. Which, of course, they did.

"In agriculture, small is beautiful," wrote the economist E. F. Schumacher. Cuba, for example, ended up, through force of circumstance, adopting a form of agriculture diagonally the opposite of what the World Bank and IMF dictate or what the former Soviet Union propagated - large-scale chemicalised mono- cultural agro-industry. Cuba is now seen as a model for sustainable, small-scale, bio-diverse, organic, close-to-consumer food production. There are some parallels with touring theatre in Ireland.

A pre-emptive defensive parry: this doesn't mean arts funding cuts are not an outrage. They are and should be reversed (so should the Cuban trade blockade). It doesn't mean we in the theatrical community shouldn't oppose those cuts with every voice we can muster. We must, in the most imaginative and forceful ways we can devise, together with musicians, artists, film-makers, writers, the entire arts community and the general public. Because art is an integral part of good education, health and social-welfare systems. The extent to which art is accepted as such is a measure of our development as civilised democracies.

So ministerial officials can stop rubbing their hands in glee at the prospect of an article from the arts sector that actually finds some good things to say about funding cuts. That's not what this is. But it is a challenge to an orthodoxy: the accepted norms for touring theatre in Ireland. It's an area where a consensus has grown fungus-like - in dark, airless rooms. The consensus hasn't been tempered by challenge. It's glib, and it's mostly led by economics. Too often the economics come first, then the job of getting the tour to make the numbers work. Like export-led cash-crop food production. It can turn a dollar. But it does unaudited environmental damage. And, ultimately, it is unsustainable.

There is an urgent need for a rougher mix in the theatrical diet. Keane, with help from the Playboy, O'Casey and comedies bolstered with soap stars, spells slow death to live touring theatre. Together they leave, like the most efficient pesticides, nothing but their own species standing in their wake. Prepare for dust-bowl auditoriums, tumbleweed blowing through airless foyers, phantom bums on state-of-the-art seats and, worst of all, beer kegs returned past their sell-by dates. The venue manager's nightmare. And the culture lover's. And the actor's and playwright's.

This is where the smaller venues come into play. Smaller venues take in smaller shows, requiring lower guarantees, for one- or two-night runs, quick in-and-out, no-fuss, tiny-risk theatre - theatre on the run. In my experience, this type of show in this type of venue is often extremely well attended and has the extra oomph of a sense of occasion: a genuine artistic event, a creative live-theatre collaboration between actor and audience, facilitated with the lightest of touches by the friendly venue. But that circuit on its own is also a fraught one.

Hype is part of attracting an audience to a touring show. Word of mouth, of course, is the most reliable box-office stimulant for a small-scale piece of live theatre, but it is no use to a one-night-stand show. It's gone and left a lot of people wondering what they've missed.

Also, back on the larger-scale circuit, there needs to be a gap between opening and closing a show for word of mouth to kick in, which means a midweek slump. With tightening belts larger venues can no longer offer guarantees except to the juggernauting tried-and-trusteds. And less tried-and-trusted pieces can't take the risk of renting a venue for a week.

The answer to this seemingly unsolvable conundrum is the double helix. The spiral of intertwining, mutually supporting circuits. With live theatre that can play both types of venue, big and small. We need to get away from the vertical model of the large circuit taking the tried-and-trusteds and the smaller circuit taking the out-on-a-limb experimentals. We need to mix them.

Each can help the other. The double helix provides the pattern for the DNA of an everlasting flux with the basic constant of challenging entertainment.

Two progressive evolutionary mutations are necessary for the double-helix ecological live-theatre system to work. The organism itself needs to adapt, and the environment for its production needs to change to nurture the raw, fragile organism through its first seasons.

Live theatre needs to adapt, inwardly and outwardly. It needs to adapt itself to suit its habitat, and it needs to adapt its habitat to suit its requirements. Ecology is the key. Not economics. Peter Brook's epithet still holds true: for us to create live theatre, all we need is a space and an audience. There are many variables on both sides of that ancient equation, what kind of space and what attracts an audience chief among them.

There is a need to challenge the model of the 250-seater circuit solely as a facility for sucking in audiences for the theatrical equivalent of fast food.

That word "solely" is important. Fast food can be a part of anybody's diet, as long as it's balanced by something fibrous and chewy. Imagination is the currency of live theatre. If that is lost, live theatre loses its lifeblood.

Naturalism in live theatre is like starting 50 metres behind your competitors in a 100-metre sprint. Naturalism favours the film camera. Close-ups, lingering shots, real locations. Why would theatre try to compete? It's like trying to make gorse grow in the Mojave. The habitat is not conducive. It's important to remember that cinema seats are between a third and half the price of theatre seats. Videos cost less again. And you can walk out without risking insulting anyone.

Theatre can't compete economically if it's offering a form of art close to film and television. It has to offer something unique, that bit extra. Live theatre offers a dynamic, participatory artistic experience. A good, well-delivered script can lift audiences out of the passivity they've come to adopt and involve them in the theatricalevent. This is palpable in the auditorium, and is connected with the fact that what's happening is happening live.

Economic "realities" are in danger of killing the vibrancy of live theatre, through blinkered thinking and short-term logic.

Here's how the double helix works: live theatre adapts itself so it can prosper in both 250-seater venues and smaller, less-well-equipped spaces. This means letting content rather than form lead the way. No need for two-day technical rehearsals, or even one-day techs. No need for 100 lighting cues, a lighting board that can talk back to you, busting the local electricity grid. No need for solid sets, rakes, risers.

Just an illuminated space. An actor. Maybe two. Maybe a musician. Or two. And a text. With something to say. And an imaginative way to say it. The ratio of content to form is higher than the current average. More content, less form. This means most touring theatre will rely more on text.

A piece of live theatre for touring should be designed to flourish in both spirals of the touring double helix. And it can be cross-fertilising. The key is the notion of the one-night stand. The gig rather than the run.

This is not a new idea. Apart from the legends of the fit-ups and Anew McMaster, Druid dreamed up the marvellous notion of the unusual rural tour, or URT, in the mid-1980s. Small towns and villages gained an extraordinary event and Druid gained an audience it would not otherwise have had. Field Day preceded Druid by a couple of years, and its tours also played in school halls, long before the local committee had seriously considered the term arts centre. Galloglass took the idea a step further in the late 1990s when it developed a relationship with a string of rural venues, many of them new.

But there's an obvious downside to the one-night stand: no opportunity to capitalise on good word of mouth. Which is where the lower strand of the double helix comes into play. It's in the interest of the big arts centres to risk a percentage of their seat sales for the one big night by not only permitting but publicly backing performances for the following few nights in smaller, less-well-equipped venues within a 40-mile radius. This allows the production to pick up on good word of mouth without tying the big venue to a run that neither it nor the production wants. Playing to empty seats is in nobody's interest.

Say, for example, I arrange with the Dunamaise Theatre, in Portlaoise, to present a one-night stand of a small-scale show. The Dunamaise agrees to put up a one-night guarantee (comparatively low) with an extra percentage of the takings if box-office income exceeds the guarantee. The show travels the following night to a smaller venue not too far away. It could be in Birr, Edenderry, Terryglass, Moate, Tullamore, Abbeyleix or one of probably about 20 possible venues. And so on for a week. That way, word of mouth can spread and the smaller venues can capitalise on the opening night in the larger venue.

Perhaps the pièce de resistance would be a return to the large venue at the end of the week, on the Saturday night. If it's a success the venue can capitalise; if not the venue risks only another small-scale, one-night guarantee.

I've toured my shows Catalpa and Bat The Father Rabbit The Son to all sorts of venues. Over 500 performances in all, from Victorian Arts Centre in Melbourne to a tiny chapel in Hollywood, Co Wicklow, where the dressing room was the lawnmower shed. One extreme feeds the other. If a piece of theatre can hold up in a one-roomed shell of a building on Inishbofinne, in Co Donegal, it can hold up anywhere. By extension, if a piece of theatre succeeds in a prestigious international arts venue, it gains artistic validation and good reviews. Word of mouth spreads and people are more likely to come to see it in less salubrious venues. The system promotes the democratisation of art. And it challenges by action - by doing its own thing - the theatrical pecking order created to a large extent by agendas of vested interest.

The deliberate, continuous, spiralling coincidence of extremes provides the essential currency of touring theatre. It's a model that can be transplanted and nurtured on Ireland's touring-theatre circuit, an antidote to the never-ending juggernaut tours. And it can be economically viable in the short term and creatively sustainable in the long term: art, ecology and economics fused in a dynamic, organic, self-enriching soil mesh for live touring theatre.

An edited version of an essay responding to Theatre Touring in Ireland: An Industry Meeting, at City Arts Centre, Dublin, part of the Civil Arts Inquiry, in partnership with Irish Theatre Magazine