It's very dry and dusty here during the summer. I've spread some pine shavings around the pen to help keep dust down and it seems to work well. Would it be ok to also use some tree/brush mulch? I've got a ton from a treeline a friend cleared.
Don't see why you couldn't use a sort of deep litter system with the wood chips, however you're not likely to get the sort of composting as you would in a wetter climate. If it's usually hot and dry, sand is also a valid option.