Custom and the Formalization of Mineral Property Rights: Evidence from the Supreme Court of Colorado, 1868-1895

Abstract : The question of when a court should look to custom as a source of law is not a new one, and can arise in frontier contexts where a formal legal authority is being imposed for the first time. This article explores this dynamic, the role of custom in formalization of property rights, in the context of case law from the Supreme Court of Colorado (hereinafter the “Court”) from 1868-1895. The analysis suggests the Court played an important role in facilitating the transition from an informal property rights regime to a formal one. Initially, faithfulness to local decisionmaking involved custom as a source of law, but the role of custom diminished over time. Statutory and common law precedent emerged to fill the remaining gaps in the law, and by 1890, custom in mineral claim disputes disappeared almost entirely. This dynamic reflects the fact that an authority imposing formal control for the first time faces a choice about the extent of actual legal change its system of formalization will introduce. One way to manage the transaction costs associated with this formalization is to codify preexisting informal rules, provided they arose from a context where conflict over customs and rules was minimal. The cases the Supreme Court of Colorado treated governing mineral location claims suggest that recognition of custom can be a cost-minimizing form of legal gradualism.

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Evolving Practice in Land Demarcation

Abstract : To better identify the full costs and benefits of land demarcation policies, this paper models demarcation choices and distinguishes between physical and legal demarcation of land boundaries. In contrast with the influential “land administration” literature and World Bank’s policy, the analysis supports voluntary—instead of mandatory—demarcation as well as non-integrated services for land administration. Consistent with its theoretical argument, the paper empirically verifies that demarcation conflicts play a lesser role in title-, land- and property-related litigation, which seems to increase in all these areas after physical demarcation is made mandatory. It also observes that linking and merging tax cadastres and land registries does not correlate with lower transaction costs.

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Poverty from Incomplete Property Rights: Evidence from American Indian Reservations

Abstract : Economists generally agree that more complete property rights lead to higher incomes, but rights are often constrained by other political and social goals. American Indian reservations provide a powerful example. Reservation poverty is often attributed to poor quality land as a result of expropriation and transfers to non-Indians, but a more complete explanation requires understanding how efforts to prevent further transfers shaped reservation land tenure. Under the Dawes Act of 1887, reservation lands were allotted to individual Indians, but held in trust by the federal government until allottees were deemed “competent” to hold fee-simple title. In 1934 the Indian Reorganization Act locked into trusteeship those lands that had not been released. We assess whether incomplete property rights resulting from trusteeship have affected reservation incomes using new panel data on income, land quality, and tenure. Our data reveal a U-shape between per capita income and the share of prime agricultural land on reservations. This is because reservations with relatively poor land were less likely to be allotted and, hence, remain under tribal control while reservations with high quality land were more likely to become fully privatized. Reservations with mid-quality land were allotted, but were less likely to be released from trusteeship. We conclude that incomplete property rights have stunted income growth for Native Americans, relative to local control, whether communal or private.

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