Ask Mr. Smarty Plants

Sam Wells has an interesting article touting the benefits of stone mulches in an arid garden on his website Res Rustica. He has observed that the soil under rocks can be moist when everything else is dry. He writes that a study conducted in the 70’s in the desert Southwest showed that moisture evaporates from bare soil at a fairly even rate of about an inch every three days. Under the same conditions, moisture evaporated from a stony area at a rate of about an inch every two weeks. This added moisture is as good as gold to plants in dry areas. It also creates an environment for soil-building organisms such as earthworms, arthropods and even fungi.

And on other issues regarding the use of mulches in fire-prone areas…The Texas Forest Service and The Texas A&M University System have put together a good publication called Firewise Landscaping in Texas that does address the use of mulches. They recommend using non-combustible materials such as rock or stone instead of mulch around the home to create a buffer between the grass and foundation. Also they suggest using rocks within the first 30 feet out from the house to break up the plantings. In addition to mulches, this publication describes the three fire defense zones surrounding a home and how to landscape each zone for maximum protection. The article also looks at fire resistance characteristics in plants. 

Of interest is an article about the comparison of the ignitability of mulch materials for a firewise landscape that the University of Arizona Cooperative Extension published. They tested 8 organic and inorganic mulches using 3 ignition sources to see what the ignition rate was in order to determine the best mulch alternatives for an arid environment. Here are some of their findings.
The conclusion is that inorganic mulches such as decomposed granite, gravel or rocks offer superior fire-proofing as landscape mulches and should be used when mulch is needed that directly abuts flammable structural materials such as siding or decking. We would also recommend, however, that any windblown debris that has collected on the rocks be regularly removed as to prevent small debris fires from igniting structures.
Green, closely mowed sod will provide excellent fire-proofing in the landscape. We would caution however that sod allowed to grow tall (> 10 cm/4 inches) and become dry would have a similar relative flammability as the pine needles and wheat straw. With this in mind we recommend keeping sod several feet away from flammable structural materials.
Dense, finely ground/screened materials such as the garden compost and the shredded bark proved to have excellent fire-proofing characteristics. These materials could possibly smolder over many days and may eventually cause other materials to ignite but it appeared to the authors that it would be an unusual occurrence. Again, as with sod, we recommend keeping a border of several feet between these mulches and any flammable structures or other improvements.
The wood chips and bark nuggets were less desirable in their fire-proofing characteristics. However, they do have a place in the landscape. We recommend that these materials be used outside Zone 1 of the property. (Zone 1 is defined as an area 4.6–9.2 m (15–30 feet) around the structure). Because of the high amount of air space between these particles they could eventually spread fire to other flammable materials (structures and plants) over time.
The wheat straw and pine needles were the least desirable in their fire-proofing characteristics. We recommend that these materials be used well outside Zone 1 of the property.

Paul Hepperly, research and training manager at the Rodale Institute in a Mulch Materials Research Report had the following to say about using stone mulch: Durability is both the appeal and the drawback of stones as mulch. They stay put and don't degrade, which means they don't need to be replenished but neither do they improve the soil. Use in paths or around trees and shrubs about 1 inch deep for good weed control and water permeability. Climate Concern: "In hot regions like the South, rocks can radiate heat and cause extreme temperatures around plants," says Gary Wade, professor and extension coordinator at the University of Georgia. "This encourages water loss and can result in severe plant stress. On a hot day, rock mulches in full sun can cause the temperature around the plant to soar into the triple digits."