American Law & Economics
Association Annual Meetings
Year 
Paper 
The Demarcation of Land
Dean Lueck
Gary D. Libecap
U of Arizona
UC Santa Barbara
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Copyright 2008
by the authors.
THE DEMARCATION OF PROPERTY RIGHTS TO LAND
GARY D. LIBECAP
UNIVERSITY OF CALIFORNIA, SANTA BARBARA
NBER
AND
DEAN LUECK
UNIVERSITY OF ARIZONA, TUCSON
Abstract
Secure property rights can play an important role in effective management of environmental and
natural resources. Locating exogenous factors that influence the security of property rights has
been a challenge in analyses of their development and impact on resource use and value. We
examine an important institutional innovation that has exogenous effects on the precision and
security of property rights to land: the systematic demarcation of property boundaries relative to
indiscriminate land claiming and bounding. The former results in a uniform grid of square
parcels (named the rectangular survey or RS), whereas the latter results in haphazard localized
bounding of properties, referred to as metes and bounds (MB). Metes and bounds are used
throughout the world. In the U.S. they are found in the original 13 states, Kentucky, and
Tennessee, as well as in the Spanish and Mexican land grants in the Southwest. The rectangular
survey outlines boundaries in terms of a centrally-controlled grid of square plots. In the US, the
rectangular survey was established by the Northwest Land Ordinance of 1785, which divided
federal government frontier lands into square mile ‘sections’ that were further divided into
smaller uniform allotments for individual claiming or purchase. We develop an economic
framework for examining land demarcation systems, focusing on a comparative analysis of the
rectangular survey and metes and bounds. We begin by considering how a decentralized system
of land claiming would generate patterns of land holdings that would be unsystematic and
depend on natural topography and the characteristics of the claimant population. We then
consider how a centralized system generates different ownership patterns and incentives for land
use, land markets, investment, and border disputes. The rectangular survey is likely to lead to
more market transactions, fewer border disputes, greater investment, higher land values, and
more infrastructure investment than metes and bounds. In our analysis, we examine a region in
central Ohio in which the metes and bounds system (within the Virginia Military District) is
adjacent to land governed by the rectangular survey. Our primary data include U.S. census
manuscripts; court opinions; state reports on infrastructure, legal disputes, and productivity; GIS
measures of topography; soil quality; and parcel-level data on boundary shape. We find that
within the MB lands of the Virginia Military District the size and shape of parcels depend on
topography as predicted by our model of decentralized claiming under MB. In our comparison
of MB and RS, the results indicate that the RS resulted in parcels of regular shape, controlling
for topography; whereas in the MB area, parcels are irregular; in the RS area there were fewer
legal disputes over land title and land boundaries and more transactions compared to the MB
area. Land values and land use differ significantly between the two areas, all else equal. The
effects of property rights demarcation appear to be long-lasting.
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