Would create odd borders.  Unfortunately ethnic groups don’t all live in a block with clear dividing lines between them and the neighbouring group. Borders reflecting ethnicities will be squiggly. Often there will be enclaves. Even enclaves may not be enough to get everybody from each ethnicity in the ‘right’ nation. This is shown in the former Yugoslavia where when a nation for Kosovars was created Serbs were suddenly on the wrong side of the border.  This is the problem with not going based upon administrative borders. The question is immediately raised; how finely grained should the border be calibrated? A border cannot be moved to suit every individual.