You can buy one of the fancy composting toilets. I'm not sure how they work or how much they cost. We've opted for a simpler, cheaper option.
http://www.relianceproducts.com/camping.php?id=9844-21&location=camping.php
We use this toilet, bought for a few dollars at WalMart. It's cheap, sturdy, easy to clean, and has no fancy parts to break down. We pee/poop in the toilet, toss some leaves, sawdust, or whatever we have handy on top, and are done with it. When the bucket is getting full, we take it out and dump it, then rinse before bringing back in. No smell, no bugs, no nasty anything.
For our dump, we picked a spot far away from the house, back in the woods. We built a quickie compost bin out of fencing and t-posts. In it goes with a few more leaves or what have you on top. There are no smells from this, either. Still, we did place it quite a ways from our living space just in case.
We also made sure to place it in an area where there wouldn't be any direct runoff into local water spots (ponds--neighbors and ours, drainage ditches, wells, etc), wasn't close to property lines, etc. We placed it where it had good tree cover so that, during downpours, there wouldn't be massive splattering and runoff. We have several acres so it was easy to place the dump bin where it wouldn't affect the neighbors.
As for how we will use it once completely composted, we're still debating that one. There are studies that say it is safe to use on veggies after a year or two of composting. There are other studies that say, no, you must let it compost for longer. There are other studies that say you may only use it for woody things, such as fruit trees. There are other studies that say, no, the bacteria can travel through the fruit trees systems. Heck if I know.
I think we'll just leave it to fertilize the forest as we have more than enough "normal" compost for our gardens.
As for the cost, yeah, it's cheap. Dirt cheap. Just buy a bucket toilet (or build one yourself--really simple to build some good looking ones) and build a fence bin. Pick up leaves from your own place, the neighbors' places, the local dump, where ever. Easy peasy.
If you're looking for the high-fangled composting toilets, you'll have to ask someone else. I'm a simple gal with a simple brain who likes simple things.