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Introducing Geographic Information Systems with ArcGIS: A Workbook Approach to Learning GIS, 3rd Edition by Michael D. Kennedy

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Georeferencing
____ 4. Choose Customize > Toolbars > Georeferencing. Place the Georeferencing toolbar where you want it.
Georeferencing is a method of moving images or grids to real-world coordinates. Basically, you identify control points on the source layer and then specify where in a real-world coordinate system these points are to be placed. It is, like spatial adjustment, a procedure that results in transformation. Spatial adjustment moves points, and associated features, in feature classes. In contrast, georeferencing moves images and grids.
In what follow you are going to set up the image of Five_Islands with UTM coordinates, so you can digitize directly in the UTM coordinate system. First, however, you will play with the image and the transformation process, both to see what it can do and how it can get you into trouble. We’ll start by moving an image a very short distance.
____ 5. The Georeferencing toolbar should be active. Mouse over the Add Control Points button to gather information about it. In version 10.0 this information will come from the Status Bar; in 10.1 it will come from the ToolTip. Click the button.
____ 6. Move the cursor on the image to the northeast point on the square island. Observe the y-coordinate on the Status bar of that point on the image. What is it? ____________. Click this point. Now move the cursor vertically about 2 inches up. Click again. Notice the image moves up one inch. So far, so good.13 The entire image maintains its orientation ...

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