Chalk is cheap (20 sticks for $1!). We like cheap fun, and Rebekah loves chalk. Although it gets messy and we have fits when we have to come in from the balcony, we have let Rebekah play with quite a bit of colored chalk this summer.
She will insist on holding as much chalk as she can at any given time, so we usually have to limit her to 3 pieces.
Although we used to worry about the second-story balcony, we're not too worried now. Rebekah's head is much too big to fit through the bars. (But just for your reassurance, no babies were harmed in the taking of these pictures.)