# 2.2.2 Costs

The most obvious cost associated with formal definition of property rights in land is the expenditure needed to physically demarcate and delineate plots, to establish and maintain accurate records of land ownership, and to enforce these rights and resolve whatever disputes might arise.1<sup>6</sup> These costs are borne by individual land owners in situations, for example frontier settlement, where public enforcement of property rights is absent and individuals make defensive investments such as guards, fences, and other demarcation devices to demonstrate the legitimacy of their claims to property and to defend such rights against possible intruders (Muller, 1997). It has been shown that the privately "optimal" amount of spending by individuals on means of protection will be inefficient from a social point of view (Feder and Feeny; de Meza and Gould 1992). Furthermore, the defensive activities undertaken often have little social value and may generate negative externalities, an issue that has been emphasized with respect to the Brazilian Amazon where the need to demonstrate "productive" land use to establish ownership claims has been linked to increased deforestation (Binswanger 1988, Southgate et al. 1991). Even where they are not associated with externalities, defensive activities that are often undertaken in speculative attempts to secure "ownership" of large tracts of land, can lead to complete dissipation of the rents to be had (Allen 1991).17 Given the undesirable impacts of private rights enforcement, public provision -in the form of land records, police, and a judiciary- would therefore be preferable in all situations except ones characterized by very low levels of population density (Malik and Schwab, 1992). This is indeed observed throughout human history. The specific form in which land records are established will still depend on the relative costs and benefits from such an activity - something that depends partially on the technology and infrastructure available for record keeping. 1<sup>8</sup> At initial stages of human development assignments of property rights appear to have been handled orally by the community (with community functionaries holding public sessions at the gate, for example). However, the benefits from keeping written records seem to have been so great that across a large number of cultures, officially validated land records are among the first documents to appear once a written language had been developed (Ellickson 1993).19 In addition to establishing unambiguous ownership rights, written records do allow to verify the ownership status of land at low cost, thus reducing the scope for asymmetric information about ownership and quality of land and making land sales and

> 16 Note that the number of disputes is itself endogenous, depending on the type of property rights system chosen.

> '' Spontaneous collective action to limit the dissipation of resource rents associated with individualized defense of property rights has been observed in a number of cases where group sizes were small (Umbeck, 1977).

> ' Ellickson (1993) notes that historically the establishment of formal land rights is closely related to the emergence and widespread use of written language; in many cultures records of land transactions were among the first texts that have been officially recorded. i See, for example the Indian Arthsastra from the 4th Century BC as well as references in the Bible relating to the period 600 BC.

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