The player's handbook isn't too wordy on what happens with ammunition. Page 221 says:
Ammunition is used up when you fire it from a projectile weapon.
Our ranger didn't feel this was right and we agreed. Surely some arrows can be find an some can be reused, right?
House Rule: Lost Ammunition
- If the target hits, the ammunition is used. We keep it in line with the core rules. Maybe the projectile shattered on impact. Maybe it can't be removed from the creature without breaking it. Maybe the creature ran away with the projectile. Its lost. Get over it.
- If the target is missed, you have 50% chances of retrieving the projectile. Roll 1d6. 4, 5 and 6 gets you the projectile back at the end of the encounter - provided you didn't flee.
We've played with this rule for a second time now and everybody seems happy with it.