Land use and agrarian reform: the effects of PD 27 and RA 6657
Date
1994-01
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Abstract
Government intervention in resource allocation is widely accepted in the literature. In a world of imperfect information and inequality, the government intervention can help the market to achieve more efficient and more equitable outcomes. However, there are market interventions that create distortions in the economy and produce economic inefficiencies. For example, the agrarian reform program during the Marcos Era (PD 27) was found to have introduced land pawning and conversions from rice and corn to other crops production as means of avoidance. In the same way, RA 6657 spurred land conversion all over the country.
The argument is that the land conversion issue should be viewed as an agrarian issue. It should be seen as arising from efforts of landowners to circumvent the reform program. The fact that PD 27 and RA 6657 made landowners insecure about their property rights, coupled with the fact that the compensation that they expect to receive when their land is acquired by the government is based on agricultural rather than its urban value, made premature conversions very likely to happen in rapidly urbanizing areas.