I did some research, and Kieth is correct that bacteria that degrade wood use nitrogen from the soil, but only studies that used a very high (1/3 ratio) of wood to soil had a measurable decrease in available nitrogen, while both drainage and moisture retention, biota, mineral content and growth rates over 3 years were markedly improved with addition of wood chips even at that level.
The addition of almond wood chips lowered soil pH, increased soil carbon, and organic matter contents and enhanced water infiltration in soil planted with almond trees in the San Joaquin Valley, CA (Holtz et al., 2004). However, the application rate was unrealistically high (≈410,000 kg·ha−1 or one-third of soil weight) and resulted in initial immobilization of soil INORGANIC (emphasis added) nitrogen. In a previous report (Tahboub et al., 2007), we found no significant effect of wood chip incorporation on plant-available nitrogen, phosphorus, or potassium at application rates up to 17,936 kg·ha−1 and concluded that wood chip incorporation was a viable means of wood disposal.
Wood chip incorporation should increase the organic matter content of soils and improve soil chemical and physical properties. The continuous use of hardwood chips for a period of 15 years at an application rate of 7000 kg·ha−1·yr−1 in the northeast United States increased organic matter content, aggregate stability, and moisture retention and reduced soil bulk density, pH, and soil erosion (Free, 1971). Sanborn et al. (2004), while studying the effect of wood chip incorporation on the rehabilitation of older landings and roads constructed on fine-textured soils in British Columbia, Canada, found that soil bulk density at 7 to 14 cm was lowest in the wood chip-amended soil when compared with the topsoil amendments. The wood chip treatment had also the highest 3-year growth rates of hybrid white spruce. Based on these promising results, the authors recommended silviculturists to use chipped wood wastes in the rehabilitation of disturbed lands.
Although our previous report showed that nutrient immobilization was not a concern with pecan wood chip incorporation, the potential beneficial aspects of wood chip incorporation on soil organic matter and the effects on soil chemical and physical properties were not included.