Wood chips provide an exceptional means to preserve moisture in the soil. Moisture retention is one of the prime advantages of a wood mulch. The mulch acts as an insulating layer that prevents moisture from evaporating from the soil. Thick layers of wood chip mulch laid against the wood stems of trees and shrubs can hold too much moisture, though, causing rot issues on the trunk. Leaving a space between the mulch and the trunk reduces the chances of rot damage.
Most mulches reduce weed growth by preventing light from reaching seedlings. Wood chips from certain trees, such as cedar, go a step further and release allelopathic chemicals that kills weed seeds. A disadvantage is that these chemicals can also kill the seedlings of desired plants. The chemicals don't harm most mature plants, so use wood chips only in established beds or use a wood mulch made from tree varieties that don't contain the allelopathic chemicals.
As the wood chips break down, they provide organic matter and natural nutrients to the soil. A drawback is that the wood temporarily leaches nitrogen, a necessary plant nutrient, from the soil surface during the decomposition process. Amending the soil before mulching, and fertilizing properly, offset the nitrogen loss. The loss only occurs at the soil surface, so it mainly affects shallow-rooted plants and not established, deep-rooted plants. One benefit of the nitrogen loss is that it further prevents new weeds from establishing in the soil surface.
The same chemicals that diminish weed growth also repel some insect pests, including termites, ants and moths. Laying wood chip mulch in beds that border the house can help protect your home from invasions of these pests. Wood chip mulch does provide attractive bedding to rodent pests, however, including mice. Avoid overly thick mulch layers. A layer no more than 3 inches deep is suitable to experience the advantages without attracting nesting rodents. Also avoid placing the mulch up against tree and shrub trunks, as nesting rodents may chew on the bark and damage the plants.