Restorative Justice (RJ) approaches crime and conflict by asking what the harm is and how to repair it instead of simply punishing the offender and ignoring the harm. Justice requires that we work to restore those who have been injured and reintegrate offenders into society. RJ programs have been extremely successful in dozens of countries.
New Zealand has had immense success, having embraced RJ 20 years ago. They experienced a 2/3s drop in juvenile crime, which has translated into the adult population as this generation ages.
RJ has the tested ability to lower crime, lower prison populations, and repair the harm crime causes.
More reading: http://www.restorativejustice.org/university-classroom/01introduction
http://www.fulbright.org.nz/voices/axford/docs/schmidd.pdf