The Demarcation of Land and the Role of Coordinating Institutions

This paper examines the origins and economic effects of the two dominant land demarcation systems: metes and bounds (MB) and the rectangular system (RS). Under MB property is demarcated by its perimeter as indicated by natural features and human structures and linked to surveys within local political jurisdictions. Under RS land demarcation is governed by a common grid with uniform square shapes, sizes, alignment, and geographically-based addresses. In the U.S. MB largely is used in the original 13 states, Kentucky, and Tennessee. The RS is found elsewhere under the Land Ordinance of 1785 that divided federal lands into square-mile sections. We develop an economic framework for examining land demarcation systems and draw predictions. Our empirical analysis focuses on a 39-county area of Ohio where both MB and RS were used in adjacent areas as a result of exogenous historical factors. The results indicate that topography influences parcel shape and size under a MB system; that parcel shapes are aligned under the RS; and that the RS is associated with higher land values, more roads, more land transactions, and fewer legal disputes than MB, all else equal. The comparative limitations of MB appear to have had negative long-term effects on land values and economic activity in the sample area.