Very Preliminary. Please do not quote or cite without permission of the author.

ASSISTING THE PHILIPPINE GOVERNMENT TO COMPLETE AGRARIAN
REFORM: A CASE STUDY IN THE SUPPORT FOR INSTITUTIONAL CHANGE
THROUGH CAPACITY DEVELOPMENT
Nobuhiko Fuwa
Chiba University, Chiba, Japan & Southeast Asian Regional Center for Graduate Study andResearch in Agriculture (SEARCA), Los Baños, Philippines.

Abstract: This paper reports on the ongoing technical assistance project by the World Bank
providing inputs to the Philippine government on its agrarian reform implementation. The
budgetary provision for the Comprehensive Agrarian Reform Program (CARP), enacted in
1988, expires in 2008, and the Philippine congress is currently debating its extension.
Possible modifications of its implementation modalities and of the priorities among its
program components are critical policy decisions that the government needs to make in the
coming months. Seizing this opportune timing, the project intends to produce a technicalreport containing an assessment of the impact of CARP implementation in the past two
decades as well as a set of policy recommendations based on the lessons learned. The paper
summarizes the main findings of the report with a main focus on the CARP impact on rural
poverty. The paper also discusses some of the author‟s very preliminary observations on thepotential needs for capacity development in terms of allowing government agencies tomove toward policy making based upon solid scientific evidence.
1. Introduction
The main intention of this paper, in the context of the CD-IC Conference, is toprovide a specific case study that can potentially be interpreted in the context of „Capacity
Development and Institutional Change (CD-IC)” in international development cooperation.
I report on a technical assistance project organized by the World Bank providing policy
inputs/advice to the Philippine government on its policies on land/agrarian reform.
This project is not an explicitly CD project where, for example, training
components play a prominent role. Nevertheless, the project can be seen to include a
capacity development objective in the sense that one of the goals of the present exercise is
to assist the Philippine government to formulate/modify policies supported by timely but
rigorous analytical evidence. .
The project has potential implications for institutional change (IC) in a few distinct
This paper draws on an ongoing World Bank project in which the author is a team member. The author
would like to thank Fabrizio Bresciani, the Task Team Leader at the Bank, and Arsenio M. Balisacan, the lead
consultant for the project, for their initiative and for numerous discussions, Sharon Faye Piza for superb
research assistance, Asia Pacific Policy Center for data support and the DAR-UPLB Comprehensive Agrarian
Reform Program Impact Assessment Project for the dataset used in this study. The views expressed in thispaper are those of the author alone and do not represent the views of the World Bank.
Agricultural Economics, Chiba University, 648 Matsudo, Matsudo-City, Chiba, 271-8510 Japan.
nfuwa@faculty.chiba-u.jp

155Very Preliminary. Please do not quote or cite without permission of the author.

ways. First, the agrarian (land) reform policies/laws involve the idea of changing one of themost deeply rooted socio-economic institutions, i.e., the rules governing the ownership andthe operation of agricultural lands. At the core of re-distributive land reform programs, ofwhich the Comprehensive Agrarian Reform Program (CARP) in the Philippine is an
example, lies the intention to change, by law (through the state authority), the patterns ofland ownership, as historically formed, for the purposes of greater social equity andproduction efficiency.
Secondly, the project is still ongoing as the Philippine Congress continues to debate
its extension before CARL expires in December 2008. The debates involve not only thoseof whether or not, as well as how long, CARP should be extended but also how CARP
should be amended, if necessary. Given its timing, the present project would provide inputs
to law makers in their efforts to extend and amend the law so that the policy making would
reflect sound analytical evidence. Thus, the project, due to its timing, interacts with one of
the most fundamental aspects of institutions in any country, viz. legislative processes.
Finally, the project intends to provide inputs to the institutional setting of theimplementation of (possibly amended) CARP in the near future. Such aspects of„institution‟ include, among others: the organization of the main executing agency, theDepartment of Agrarian Reform (DAR), its relationships with other line agencies (e.g.,
DENR, DA, DHPW, etc.), budgetary allocations among such agencies as well as within
agencies among different levels, its relationship with local government units (LGUs), andpriority setting among different components of CARP.
I have to emphasize that the project is still ongoing, and that neither the final shapeof the project, nor the outcomes of Congressional processes, have yet emerged as of thiswriting. In this paper, I report on the main components of the project report that haveemerged so far, and the main gaps that have been identified in terms of analytical capacity
to support evidence-based policy making in the Philippines.
The rest of the paper is organized as follows. The next section provides a briefbackground of the project, including the policy context of land reform in the Philippines.
Section 3 describes the main objectives of the project as well as the major policy issues
being addressed. Section 4 reports on some of the initial findings to be included in the
project report. Section 5 discusses preliminary findings regarding major areas for capacity
development needs/gaps in pushing the government toward more „evidence-based‟ policy
formulation. The final section concludes the paper.
2. Background and context of carp extension
Historical background
Both theoretical and empirical developments in the development economics
literature in the past few decades have demonstrated many aspects of the negativesocio-economic consequences of high inequality in the distribution of wealth (e.g.,
Dasgupta and Ray 1986, Bardhan and Udry 2000). High inequality has been found tohinder subsequent economic growth (e.g., Pearson and Tabellini 1994), inhibit the poor
from realizing their full potentials in economic activities (e.g., Deininger and Squire 1998),
encourage rent-seeking activities (e. g,. Rodrik 1996), and reduce the poverty reduction
impact of economic growth (Ravallion and Datt). The Philippines is arguably a classic
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example of an economy suffering from all of these consequences (Balisacan, Fuwa andDebuque 2003).
The Philippines has long been known for its relatively high inequality in
distribution of income and wealth (e.g., Balisacan 2003), with a long history of intermittent
incidence of peasant unrest and rural insurgencies. As a result, the issue of land reform has
continuously been on political agenda at least since the early part of the 20 th century.
Furthermore, after the „EDSA revolution‟ which toppled the presidency of Ferdinand
Marcos in 1986, land reform was on the top priority policy agenda for the newly-born
presidency of Corazon Aquino. Although the basic thrust of land reform in the Philippines
was mostly in place, at least on paper, by the 1960s, the Comprehensive Agrarian Reform
Law (CARL, or Republic Act 6657) enacted during the Aquino administration in 1988
expanded its scope significantly. １
Accomplishments:
Twenty years after the enactment of CARL, however, the performance of the
agricultural sector in the Philippines, as well as the implementation record of theComprehensive Agrarian Reform Program (CARP), has been well below its initialexpectation. The growth in agricultural productivity, for example, has remained relatively
low; total factor productivity in agriculture grew only by 9% during the period between
1980 and 1998, compared to 27% in Thailand and 49% in Indonesia (World Bank). The
relative performance of the Philippines in rural poverty reduction has been similarly dismalcompared to the impressive record of its Asian neighbors (Balisacan and Fuwa 2004, 2007).
Furthermore, the implementation of CARP (i.e., actual re-distribution of lands
according to the land reform law) has proceeded in a much slower pace than the provisionof the law. The Philippine legislature allocated 53 billion pesos for the implementation of
the land re-distribution and other supporting programs during the ten year period between
1988 and 1998, and then additional 50 billion pesos were allocated for the following ten
years (1998-2008). With the investment of those public funds over the two decades,
however, the implementation of the land re-distribution program remains grossly
inadequate. While, at the aggregate level, 89% of the potential „scope‟ (i.e., potential land
areas for land-redistribution) was already covered by CARP by the end of 2007(?), much ofthis „accomplishment‟ is concentrated on the non-contentious land types, such as publicly
owned lands. On the other hand, in the category of „compulsory acquisition (CA)‟ (i.e., thetract of privately owned lands of the size beyond the legal retention limits, which is to bepurchased by the government for re-distribution to the land reform beneficiaries), whichconstitutes the core of the CARP, only 18% of the total „scope‟ has been covered. The „CA‟
category constitutes one third of the total „scope‟ (the estimated total area of lands to beredistributed among farmer beneficiaries as of 1988), by far the largest category. In otherwords, over 80 percent of this core category of land distribution program is still unfinished
20 years after the CARP legislation (APPC 2008).
In addition, even for those land areas that have been already „covered‟ (lands thathave been declared by the government to be re-distributed) by the program, a large
proportion of those lands have been covered with „Collective‟ Certificates of Land
Ownership Award (CLOA). „Collective‟ CLOAs identify a set of parcels of lands owned bya landowner involving a collection of (potential) farmer beneficiaries and declare those157

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lands be re-distributed among those beneficiaries, but stop short of assigning parcels toeach beneficiary. Without establishing clear boundaries for each farmer beneficiaries, there
is little tenure security, and thus there can be little change in farming operations comparedto the pre-reform period. While the issuance of such „Collective‟ CLOAs is meant as astarting point of the actual land redistribution, it has been found that in a majority of areas
the process of land redistribution stopped after the issuance of the collective CLOAs. Thus,
the actual „accomplishments‟ (i.e, the lands actually re-distributed to individual farmer
beneficiaries with clearly defined land parcels with secure titles) are likely to be even lower
than the dismal record of official „accomplishments‟ as described above (e.g., only 18% of
the CA program accomplished). (See APPC 2007 for more details)
Current timing:
Despite the slow pace of CARP implementation over the past two decades, under
the current law, CARP was initially to expire in June 2008. During the State of the Nation
address in early 2008, President Gloria Macapagal-Arroyo expressed her intention to
pursue the extension of CARP with some reform in its implementation schemes. She
expressed her interest in reforming CARP in the direction of “making it more supportive of
the national agribusiness development strategy while ensuring the original equity and social
stability goals” (World Bank). The Congress has been debating whether CARP should be
extended and, if so, how the modalities and the length of such an extension should be set.
Earlier, a widely-shared expectation appeared to be that the Congress would act upon the
CARP extension issue by the originally-set expiration date in June (World Bank). It cameas a surprise, then, in early June, the Congress decided to extend/postpone the expiration
date of current CARP until December 2008, and to continue the debate on its extension(beyond 2008) in the meantime. As of this writing, the Congress is to resume its debate inJuly 2008 and to determine its fate beyond 2008 by its (extended) expiry in December.
Changing political landscape:As anther aspect of the political and economic backdrop of the current debate on
CARP extension, observers have noted the sharp contrast in the political landscape between
the late 1980s, when CARP was initially enacted, and today. When CARP was first enacted
in 1988, two years after the start of Aquino presidency, agrarian reform was among the top
policy agenda. At the background were the perceived imminent threats of rural insurgency
led by New Peoples Army (the military arm of the Communist Party of the Philippines)
which had gained significant acceptance in various parts of the country in response to thepolitical and economic crises under the Marcos dictatorship (e.g., Wurfel 1988, Reidinger
1995). In addition, the issue of „genuine agrarian reform‟ had become one of the main
campaign promise that would unite a broad anti-Marcos coalition ranging from the rightwing of Catholic Church, the business community to militant grassroots movements during
the final period of the Marcos presidency (e.g., Fuwa 2000, Putzel 1992). Although fierce
political battles over the content of the agrarian reform law (e.g., the extent of
re-distributive nature of the reform, the maximum retention limit on the size of
landholdings, etc.) were waged, inevitably, during the initial two years of Aquinopresidency, a broad political support for agrarian reform legislation apparently existed. ２
In contrast, in 2008, the political climate appears to be markedly different. The kind158

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of the broad political coalition behind the initial CARP legislation in 1988 does not exist foran extension of CARP. In fact, some of the mainstream peasant organizations (which had
been among the main political force for redistributive land reform) have decided to opposea CARP extension, on the ground that the CARP, in its current form, is ineffective andunacceptable. When the Congress failed to reach an agreement in the CARP extension
debate in early June, there was a mobilized protest by some peasant organizations, but thesize and intensity of the protest was surprisingly modest. This appeared to be in a sharp andsymbolic contrast with the infamous “Mendiola Bridge massacre” in January 1987, wherethirteen members and supporters of Kilusang Magbubukid ng Pilipinas (Peasant Movementof the Philippines) holding a massive rally demanding „a genuine land reform‟ were killed
near Malacañan Palace.
Such a sharp contrast, however, is not surprising. As we will see in section four
below, the economic activities in rural areas diversified considerably over the past few
decades. As a result, gaining access to agricultural land is only one of several possible„pathways‟ out of rural poverty in many areas. At the same time, landowners, on their part,also diversified into various non-agricultural sectors with higher returns than in agriculture,and thus agricultural landholdings are not as crucial as they used to be. In general, there has
been a shift, across wide range of social strata, from agricultural land toward human capital
as a main source of income-generating wealth. As a result, the stake of redistributive land
reform, both for the landless and for landowners, has become somewhat muted compared tothe time of CARP legislation in the late 1980s.
3. The project description
In the following, I report on a World Bank technical assistance project aimed atproviding inputs to policy makers within the Philippine government in the current debate
on the extension of CARP. As stated in its funding proposal (World Bank 2007), the WorldBank project:“intends to provide analytical support to the Government of the Philippines in its
thrust for improving the welfare of the rural poor through the extension of the
CARP. To that end it will examine the current articulation and structure of theagrarian reform program in the Philippines and its consistency with respect to thebroader rural development agenda currently pursued by the government and thechallenges and constraints presently faced by the Philippine society more in general.
The ultimate goal is to derive a set of policy implications and elaborate possible
solutions aimed at making the agrarian reform program‟s implementation swifter,
improving its sustainability, strengthening its consistency with respect to thebroader goals of rural development and poverty reduction, and enhancing its
feasibility given the estimated available resources.”
With the goal as stated, the project would produce a „Technical Report drafted in a
non-technical language accessible by non-economists that will highlight the main policy
options to reform CARP and land policies in order to foster pro-poor rural and agricultural
growth” (World Bank 2007).
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A team of consultants, composed of academics, has been assembled to co-author
the report with a few World Bank staff members. In addition, a technical background paper
was commissioned to conduct some original data analysis to feed into the report. In view ofother existing studies on policy issues closely related to agrarian reform (including R & D
reforms and extension services, rural financial markets, natural resource management,
public expenditure reviews, etc.), the report will be relatively narrowly focused on thefollowing broad research topics (World Bank, 2007):The degree to which the strategy followed by DAR in delivering support services
to agrarian reform communities is consistent with a pro-poor rural development
strategy,The extent to which the current CARL framework affects land markets, farm
productivity, the investment climate in rural areas and the viability of the small
farm sector,
Under which conditions the extension of the CARP will be able to meet thechallenges it will face in the area of land distribution.
A major emphasis appears to be that the policy implications of the report be“analytically grounded”: policy discussions be based on solid empirical evidence that meetsthe criteria of reasonable academic rigor and those of international best practices. While thestudy intends to maintain a high scientific standard, it does not intend to undertake fullcost-benefit analyses.
Role of Agriculture in rural poverty reduction
Given the importance of the agricultural sector in rural areas in providing
livelihood, there is no question that the growth in the agricultural sector should play a
critical role in any attempt in poverty reduction in rural areas. In fact, a recent analysis
based on the provincial panel data during 1988-1997, the reduction in poverty in responseto the income growth in the agricultural sector is nearly 50% and 70% higher, if „poverty‟ ismeasured by the poverty gap and the squared poverty gap indices, respectively, than that of
the income growth in the non-agricultural sector.３, ４ Furthermore, the same regression
analysis suggests that the increase in poverty during a period of economic contraction(declining income) may be larger in response to non-agricultural income change than thechange in poverty in response to the agricultural income change. This appears to imply
potentially higher risks involved in relying on nonagricultural sector growth as an engine
for (rural) poverty reduction with possibly larger setbacks in poverty incidence when theeconomy faces relatively large and negative income shocks (e.g., the Asian financial crisis,
El Niño, etc.).
At the same time, however, the same provincial panel data covering the period
between 1988-1997 also show that in the majority of the provinces poverty reduction was
driven by the faster growth of the nonagricultural sector (e.g., in 46 out of the 50 provinces
where poverty fell during 1988-1997—there were 70 provinces in all—, nonagricultural
incomes grew faster than did agricultural incomes). This is not inconsistent with the notionthat agricultural income growth tends to be more pro-poor than non-agricultural income
growth. Though the „growth elasticity of poverty reduction‟ after controlling for thedifferential income shares of the agricultural sector is higher than that of the nonagricultural

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sector as we saw earlier, the effects of large shares or faster growth of non-agricultural
income seem to dominate in a majority of provinces.
While in the majority of the provinces the growth of the nonagricultural income
was higher than that of the agricultural income and poverty incidence fell, however, there
are a sizble number of provinces where different patterns are observed. Unfortunately,
studies documenting such diversity in alternative pathways out of rural poverty are rare dueto the paucity of household-level panel data covering sufficiently long periods of time
appropriate for such purposes. Nevertheless, the recent such studies tend to point to the
crucial role played by the non-agricultural income growth in poverty reduction and theincrease in the relative returns to education vis-à-vis agricultural land. (e.g., Hayami and
Kikuchi 2000, Fuwa 1999, 2007, Hossain et al., Estudillo, Sawada and Otsuka, 2006). ５
The relative importance among the specific sources of non-agricultural /non-farmeconomic activities that drive poverty reduction, however, appears to differ from one
location to another. Such differences are likely to depend on geographical location (e.g.,
proximity to Manila and to local town centers) as well as other socio-economic
characteristics and the ecosystems constraining/ defining agricultural production. In fact,
the geographical coverage of those micro-level studies is extremely limited so far; they arebased on longitudinal data drawn from a small number of rice-growing villages in Luzon
and Panay islands. Therefore, those results need to be interpreted with ample care, taking
into consideration the relative characteristics of the sampled communities.

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Changes in Poverty Incidence and growth of ag. versus non-ag income among 70
province, 1988-1997
Ag. vs. non-ag income growth rate during 1988-1997
ag.income > non-ag ag.income < non-ag income
incomepoverty
increase poverty increase, via poverty increase, via ag. Income
incidence
non-ag.
income contraction
during
Agusan N., Aklan, Bulacan, Cavite,
contraction
1988-1997
E. Samar, Lanao S., Isabela, Laguna, Maguindanao, N.
Masbate, Occ. Mindoro, Ecija, Pampanga, W.Samar, S.Leyte,
Sultan Kudarat, Surigao S., Zambales,
Surigao N [5]Aurora [15]decrease poverty reduction, via ag. Poverty reduction, via non-ag. income
income growth
growthAgusanS,
Benguet, Abra, Albay, Antique, Bataan, Batanes,
Cagayan, Pangasinan [4]Batangas,
Bohol,
Bukidnon,Camarines N, Camarines S, Camiguin,
Capiz, Catanduanes, Cebu, Davao N.,
Daavao S., Davao Or, Ifugao, Ilocos
Norte, Ilocos Sur, Iloilo, KalingaApayao, Lanao N, Leyte, Marinduque,Misamis Occ, Misamis Or, Mt.
Province, Negros Occ, Negros Or, N
Cotabato, N Samar, N. Viscaya, Or.
Mindoro, Palawan, La Union, Quezon,
Quirino, Romblon, Siquijor, Sorsogon,
S Cotabato, Tarlac, Tawi-Tawi,
Zamboanga N., Zamboanga S. [46]The empirical evidence available thus far suggests, therefore, that there are
multiple pathways out of rural poverty (including those through non-agricultural wage
employment, non-farm enterprise, and international migration, to name only a few), of
which the traditional pathway of climbing the “agricultural ladder” is only one. The
agricultural pathway would be more likely to be suitable in certain geographical areas thanin others, and for certain types of households than for others within the same community.
Those observations, in turn, raise the question: given the variety of potential pathways outof poverty in a given area, has CARP been the best strategy for poverty reduction fordifferent areas? To what extent has CARP been targeted to the areas (or the types ofhouseholds) where land reform and agricultural growth provide the optimal poverty
reduction strategy? What should be the appropriate criteria for identifying and targetingsuch areas or households?
Work is currently underway with some original data analysis to address theseissues, and the findings will be incorporated in the final project report.

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How much did the welfare level of CARP beneficiaries improve?
There are two distinct aspects of CARP components, i.e., land tenure improvement(LTI: such as land acquisition and distribution and conversion of share tenancy into
leasehold), and program beneficiaries development (PBD: including the Agrarian Reform
Community (ARC) strategy, consisting of support services such as irrigation, infrastructure,training, extension services, etc.) (APPC 2007). LTI mostly involves farm levelinterventions, while PBD mainly comprises community-level interventions. Accordingly,
the examination of the impact of CARP implementation on poverty also needs to take noteof those different levels of interventions.
Amid the general paucity of empirical studies documenting the causal impact of
CARP implementation, there are a small number of studies constituting, collectively, somesuggestive evidence. Reyes (2003) uses the household survey data including a sample ofroughly 1000 farm households collected nationwide in 1990 and 2000, and finds that CARP
beneficiary households (agrarian reform beneficiaries; ARBs) tended to have higher
household income on average (P49, 594 in 1990; P98,653 in 2000) than did non-ARB
households (P39,142 in 1990 and P76,156 in 2000) in both 1990 and in 2000. Positive
correlations are also confirmed in the contexts of regression analyses with household
characteristics controlled (using the cross-section data in 2000); the number of years being
an ARB is positively correlated with percapita income (and also with the probability of
being non-poor), after controlling for household size, schooling of the household head,
access to irrigated land, „access to credit‟ and whether or not residing in an Agrarian
Reform Community (ARC), based on the 2000 cross-section regression analysis. ６
In addition, Reyes (2003) reports that the headcount poverty ratio declined from
47.6% to 45.2% during 1990-2000 among ARBs while poverty incidence increased from
55.1% to 56.4% among non-ARBs. Furthermore, among the ARB households living under
the poverty line as of 1990, 38% of them became non-poor by 2000 while somewhat lower
30% of the non-ARBs living below the poverty line in 1990 became non-poor during thesame period; similarly, 30 % of the non-poor ARBs as of 1990 fell into poverty by 2000
and substantially higher 39% of the non-poor non-ARBs as of 1990 became poor by 2000.７
Taking an alternative approach and using a cross-section household survey with amuch larger sample size and with richer community-level information in 2004 (Annual
Poverty Indicators Survey merged with the Census of Population and Housing), APPC(2007) finds that, after controlling for a number of household and community
characteristics (which do not include the size of landholdings), the percapita household
consumption expenditure (as well as percapita income, net farm income and the probabilityof being non-poor) is significantly and positively correlated with both ARB and ARC statusof the households. The regression results imply that gaining additional land access throughLTI components of CARP (i.e., becoming an ARB) for initially landless households is
associated with about 15% increase in percapita consumption expenditures, and,furthermore, residing in an ARC is associated with additional 7 to 8% higher consumption
expenditures; combining the provision of land distribution and ARC projects thus isassociated with 23% higher percapita consumption expenditures on average. If we were to
take the quantitative magnitudes of the regression coefficients literally, the results imply
that the LTI component of CARP appears to have roughly twice the impact of PBD
components (support services and infrastructure development) on percapita consumption.
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Finally there is no evidence, based on this model, that landless households benefit from thespillover of PBD interventions. There are reasons to be very cautious in taking thosenumbers at the face value, however, due to the potential endogeneity issues which areunavoidable in interpreting the kind of cross-section regression results being reported here
(see endnote 6 above on Reyes 2003).
In addition to the analyses of CARP impact based on household-level observations,
APPC (2007) also reports on a barangay (village)-level analysis focusing on the impact of
ARC interventions (PBD components) on the (barangay-level) average level of household
welfare. Unlike the cross-section regression results at the household-level that we haveexamined so far, this barangay-level analysis attempts to control for the potential
endogeneity problem using the propensity score matching technique. ８ Based on the„matched‟ comparison of 2,934 barangays with 1,467 ARCs (Agrarian Reform
Communities: those villages receiving PBD interventions) and non-ARCs (those villages
not receiving PBD interventions) each, APPC (2007) finds that the average percapita
consumption expenditures in ARCs increased by 19.5%, from P12,157 in 1990 to P14,525
in 2000, while the average percapita consumption expenditures in the matched non-ARCs
increased by slightly lower 18.3% from P12,189 in 1990 to P14,422 in 2000.９ Similarly,
the headcount poverty ratio in ARCs declined from 39.8% in 1990 to 24.2% while thepoverty ratio in matched non-ARCs fell from 39% in 1990 to 24.6% in 2000. Estimatedstandard errors of percapita consumption are not reported, and thus the test of statisticalsignificance in the observed differences between ARCs and non-ARCs cannot be carriedout, but the point estimates suggest that the village-level average percapita consumption
expenditures grew faster in ARC than in non-ARCs even after the effects of ARC targetingare (at least partially) controlled for. The quantitative magnitudes of the differences arequite modest, however.１０
Apart from such micro-level evidence, Balisacan and Fuwa (2003, 2004)
conducted provincial-level analysis, investigating the correlation between theprovincial-level poverty outcomes and the regional-level accomplishments in CARP
implementation. They find that during the period 1988-1997, CARP implementation ispositively and significantly associated with both provincial mean income growth andpoverty reduction, implying the possibility that CARP may have effects of both improving
production efficiency (thus raising income growth) and equity (thus reducing poverty, evenafter controlling for the average income growth). A later replication of the same analysis
based on the data period 1988-2000 finds, however, that CARP may have growth effects
but not any significant distributive effect (Balisacan 2007). The evidence is somewhat
mixed, therefore, but again, there exists additional suggestive evidence that CARP hadsignificant effects on raising living standards among rural population.
In conclusion, while there have been few rigorous empirical analyses of the causal
impact of CARP on the welfare-level (living standards) of its beneficiaries which meet theinternational standard of today‟s academic rigor (mostly due to the absence of relevant data
for such analyses), a few pieces of empirical evidence do exist that is consistent with thepositive effects of CARP. They tend to indicate that the recipients of LTI interventions are
better off than their counterparts without LTI interventions, and a similar conclusion applies
to PBD interventions (i.e., ARC projects). Although the evidence is even thinner, what little
evidence that exists suggests the possibility that the quantitative impact of LTI on
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household welfare may be about twice as large as that of PBD interventions, while theeffects of PBD interventions on landless households living in the same community may be
negligible. While there has been a notion (fear) that land-redistribution (i.e, LTI
interventions) alone would not make much difference unless additional support services areprovided, empirical results show that such a fear may not be well-founded. So, land
re-distribution through CARP implementation (dismal though its implementation records
have been) has actually benefited its beneficiaries, with or without additional support
services provided through ARC interventions, and land tenure improvements should
continue to be the core of CARP implementation.
Other Issues to be Addressed in the Project Report
While the findings are still yet to be available, the final project report intends toaddress following policy issues as well: Re-examination of the various alternative legal arrangements in lieu of/in addition
to land redistribution allowed under CARP, including: Stock Distribution Options,
Joint Venture Arrangements, Lease-back Arrangements, Contract-growing
arrangements, and Management contracts.
 Implication of legal restrictions on land rental transactions and their effects on theviability of small farms.
 Prospects for land reform on Sugar lands where significant scale economies are
believed to exist.
 Sustainability of land reform beneficiaries after the initial redistribution
 Challenges facing CARP implementation beyond 2008: the level and compositionof fiscal support by the government; implications of the Biofuels Act; the growth in
the demand for land for non-agricultural uses; incentive issues in the key
implementing agencies; the political fallouts of 2010 election; global market
shift—such as, the rise of integrated food supply chains, agribusiness corporations
and supermarket „revolution‟, and new markets for animal feed and biofuels.
4. Preliminary assessment of Capacity Development needs: Toward evidence-based
policy making
In this section we focus on some of the identified needs in capacity development interms of promoting analytically-grounded policy formulation. While there would be anumber of potential areas where CD needs exist, our discussion in this section focuses on
the knowledge gaps in terms of the policy issues discussed in the previous section, as
identified so far. Since the project is still ongoing, this is quite preliminary. Furthermore, amore systematic examination of the CD needs in the implementation of land reform policies
would be beyond the scope of this paper, at this point.
As we started reviewing the existing empirical literature on the impact of CARP asa basis for policy implications, what stood out was the conspicuous absence of solid
empirical work documenting CARP impacts. While it is well known that causal inferencesin social sciences (including economics), unlike in natural sciences, are plagued withserious difficulties due to the non-experimental nature of the data we typically analyze,

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there has been a massive advance in the availability of relatively high quality data and in
the analytical methodologies within the economics profession in the past two decades (e.g.,
Fuwa 2008a). The rapid increase in the availability of rigorous impact evaluation studies ofvarious policy interventions (both by the government and by NGOs) in many developing
countries is one consequence of such developments, which, in turn, has led to the generalrise in the scientific threshold in establishing causal inferences in the academic world. １１
Accordingly, international best practices in micro-level (i.e., household level) datacollection and in data analysis have also made major advances. In the area of impact
assessments of CARP in the past two decades, however, there appears to be a gap between
those studies found in the country and the international best practices.
Perhaps the most serious is the availability of relevant data. While attempts havebeen made to collect panel data at the household level for the purpose of evaluating theimpacts of CARP, the data collection scheme, including questionnaire design, was not fully
amenable to the originally stipulated purposes. For example, a set of panel data at thehousehold level covering the period between 1990 and 2001 was collected as a part of a
research project (funded by a number of donors including European Union and the World
Bank) for CARP Impact assessment. While some useful descriptions were produced as
outcomes of the project, the basic information suitable for the assessment of welfare levels
and poverty outcomes (such as household consumption expenditures) were not collectedaccording to the acceptable international standard, many variables collected with household
questionnaires (including inputs for agricultural production, household enterprise activities,
and household incomes) are not directly comparable between the 1990 and 2000 rounds,
and detailed information for the identification and construction of household-panel (which
has implications for attrition biases in any inference based on the panel data) is not readily
available (Fuwa 2008). Due to such data limitations, commissioned studies trying toevaluate the impact of CARP were generally not able to utilize fully the potentiallypowerful nature of the household-level panel data.１２ Furthermore, a similar attempt toassess the impact of CARP was repeated in 2006. While the data collection scheme wassomewhat improved in the 2006 data round, unfortunately, the most important shortcomingof the 2000 round of CARP Impact study still appears to persist: i.e., the non-comparabilityof the data rounds (i.e., 2000 versus 2006) and the absence of a dependable (by theinternational standard) indicator of household welfare.
This does not necessarily mean, however, that the analytical capacity does not exist
in the country. In fact, for example, in part due to the relative paucity of the analyticalevidence on the causal impact of CARP on rural poverty (and other outcomes) anotherstudy was commissioned in 2007 which looked at such issues. In part due to the potential
data issues, some of which are raised in the previous paragraph, the study team utilized thedata sources other than the household-level panel data mentioned above, including thenational censuses (Censuses of Population and Housing and Agricultural Censuses, bothconducted every decade) as well as the Family Income and Expenditure Surveys, which is amajor nationally representative data source for living standards and poverty in the country(APPC 2007). Given the data limitations (most importantly the absence of household-level
panel data), the study recently utilized analytical methodologies that have become standard
within our profession in the last decade (such as the propensity score matching technique
for the purpose of constructing „control‟ group samples).
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Another aspect the obstacles to evidence-based policy making that has transpired
during the current policy debate is that the little empirical evidence that does exist has notbeen effectively disseminated beyond the narrow circle of professionals and/or researchers.
Evidence has been produced, for example, showing positive correlations between CARP
implementation and the level of household incomes, but such information does not seem tohave been widely and effectively shared among legislators or NGOs. １３ There appear to be
additional rooms, therefore, for whatever empirical evidence that do exist to be more
widely transmitted in a timelier manner for policy debates.
5. Conclusions
Twenty years after the initial enactment of the Comprehensive Agrarian Reform
Law (CARL) in 1988, the record of its actual implementation of land redistribution remains
gross inadequate. In particular, over 80% of the privately owned lands, initially intended forthe program coverage, remain uncovered by CARP. Meanwhile, the economic activities inrural areas diversified substantially over the past two decades, and, accordingly, pathways
out of rural poverty have also become increasingly diverse, ranging from the traditional„agricultural ladder‟ to various rural non-farm activities and to international migration. It
has become increasingly an open question as to whether the agricultural growth and land
reform are the optimal poverty reduction strategy in every region of the country.
Against such backgrounds, an extension of CARL is being debated in the Congress
and this paper has reported on the progress of a World Bank project intending to provide
inputs to the policy formulation of the CARP extension. Since the project itself, as well as
the current policy debates, is still ongoing, it is difficult to draw any definitive conclusion at
this point. However, some tentative and preliminary findings coming out of the project so
far include the following: There is indeed some suggestive but nationwide evidence showing that CARP
implementation has positive impact on the living standards of its beneficiaries, andthat poverty reduction among CARP beneficiaries was faster than that among
non-beneficiaries.
 The core of such impact of CARP arises from the land tenure improvement (LTI)such as land distribution. While additional support services, provided through theAgrarian Reform Community projects, provide additional benefits to agrarianreform beneficiaries (ARBs), the impact of LTI interventions may be as high as
about twice that of the ARC impact.
 Those evidence, however, is suggestive but not definitive due to potential
difficulty in making causal inferences due to the nature of the data being used inthose studies. In fact there has been a serious shortage in the availability ofhigh-quality data which can permit more definitive inferences regarding the impact
of CARP. Despite the attempts to collect data for such analyses, the data that doexist tend not to meet the standards of international best practices.
 There appears to be a serious need for upgrading the data collection capacity,
particularly in the area of household-level panel data sets, as well as its timely
analyses.

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

In addition, there appear to have been a relative lack of dissemination of theanalytical evidence that does exist that informs policy discussions.

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NOTES
１

For detailed documentation of the long and checkered history of agrarian reform in thePhilippines, see, for example, Takigawa (1976), Balisacan (1990), Hayami, et al (1990), Putzel(1992), Reidinger (1995), and Fuwa (2000).
２

See Fuwa (2000) for a more detailed synthesis of the literature on the political landscape leading

to CARP legislation.
３

This inference is based on an estimation of the following regression equation:
lnPi = 1sag, ilnYag, i + 2 snon-ag, ilnYnon-ag, i + 3sag, ilnYag, i*d(Yi<0)+ 4 snon-ag, ilnYnon-ag, i*d(Yi<0) + i

where Pi is a poverty measure in province i, Yag, i and Ynon-ag, i are per-capita income from theagricultural and non-agricultural sectors, respectively, in province i, sag and sag are the shares in the
total percapita income of agricultural and non-agricultural incomes, respectively, in province i,d(Yi<0) is a dummy variable taking value one if the provincial economy contracted, rather thangrew, during 1988-1997, the operator „‟ means taking the difference between 1997 and 1988, and1 are 2 are the growth elasticity of agricultural income growth and of nonagricultural income
growth, respectively. See Fuwa (2008b) for more details.
４

If poverty is measured by the headcount poverty ratio, however, the difference in the „growthelasticity of poverty reduction‟ between the agricultural and non-agricultural sectors is not
significantly different from zero.
５

Despite the importance of the growth in the non-agricultural sector, however, it is also important

to emphasize that most of those studies also point to the crucial role played by the dramatic increasein the agricultural productivity due to the Green Revolution in the 1970s, which preceded the
expansion in non-agricultural income opportunities. The increased income resulting from theagricultural productivity growth allowed farm households to invest in their children‟s education,
which, in turn, allowed those children to benefit from the expansion of the employment
opportunities in the non-agricultural sector.
６

The positive correlations as observed here could potentially be a result of positive causal effectof CARP implementation. However, it is also possible that the income of ARBs tend to be higher
because, due to various factors which are not (or cannot be) controlled in the regression analysis,
ARBs tend to have higher income on average than those non-ARBs even without becoming CARP
beneficiaries. For example, if some „unobserved‟ factors (e.g., being endowed with lands with better

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soil quality; having higher farm management skills, etc.) are directly related to both CARP
implementation and household welfare outcomes, positive statistical correlations could emerge even
if there is no direct causal relationship between the ARB status and higher income. The kind ofdifficulties in interpreting observed statistical correlations as causal relationships in the context of
econometric analyses is broadly referred to as „endogeneity problems‟ in the econometrics literature.
See, for example, Wooldridge (2002), esp. Chapter 4.
７

While such divergence between ARBs and non-ARBs may seem to suggest the positive impact

of CARP implementation, there is also some suggestive evidence that the data may be seriously
flawed. Gordoncillo et al (2003; 18) find in the same dataset that the median(mean) household size
among ARBs declined form 6(6.3) to 5(5.3) during 1990-2000 while the mean household size
declined much slowly from 5.7 to 5.3 (and there was no change in median household size at 5)
among non-ARBs. Therefore, it appears that the diverging patterns in the change in percapita
income and poverty incidence is mainly driven by the difference in the rate of decline in thehousehold size, but it is not immediately clear why the household size had to decline much fasteramong ARBs than among non-ARBs. Unless a reasonable explanation is found for this observation,in my view, it is difficult to interpret the divergent patterns in the percapita income changes (as wellas the changes in poverty incidence) between ARBs and non-ARBs, let alone the causal effect of
CARP. If the real percapita income data between 1990 and 2000 were truly comparable, then causal
impact of CARP implementation on the level of real percapita incomes could be inferred byregressing the change in the real percapita income during 1990-2000 on the change in the ARB
status during the same period as well as the changes in the household and other regional
characteristics, a procedure that could have controlled for the unobserved but time invariant factors
affecting the level of welfare, such as land quality of the farm, the managerial and other ability of
the farmer and the preferences of the household members (e.g., the spurious statistical correlation
due to the possibility that farmers with better physical and/or managerial ability are more likely to
become ARBs and also to have higher incomes can be avoided).
８

In this approach, for each „ARC barangay‟, a “control barangay” is selected among non-ARC

barangays (villages without PBD interventions) by searching for a barangay that is the most similar
to the ARC barangay in terms of the likelihood of ARC coverage, which, in turn, is inferred using
the data on observable village-level characteristics. The causal impact of ARC interventions can beinferred as the average differences in the village-level welfare measures between the paired ARC
and non-ARC barangays.

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９

In fact, the percapita consumption expenditures used here are not the actual figures which do notexist in the Census of Population and Housing, but rather predicted ones; they are obtained by firstestimating the parameters of an income generating function using FIES (where consumption
expenditures are observed) and then predicting percapita consumption using the Census data byplugging the right hand side variables (i.e., household and barangay characteristics) into theestimated income generating function.
１０

The relatively small difference found in the average percapita consumption expenditures

between ARCs and non-ARCs (less than 1% in 2000) at the barangay-aggregate level here is notdirectly comparable with our earlier observation about the 7% higher percapita consumption of
landowning households (ARB or otherwise) within ARCs compared to those within non-ARCs,
after controlling for other household and community characteristics; this is in part because theformer is the average across all households in the barangay including those households without land(and other non-ARBs) who tend to gain relatively little from ARC interventions. Having said that,both approaches (i. e., the regression and the matched comparison) of comparing cross-section
differences in the level of percapita consumption expenditures in one point in time rely on the same
basic assumption that there exist no additional (and unobserved) factors affecting the ARC (as wellas the ARB, for that matter, in the case of the regression analysis) status once the effects of observed
factors are accounted for (by including those variables as regressors in the regression, or by
including those variables as the right-hand-side variables in the model estimating the propensity
scores in the process of forming the „matching‟ sample) and both approaches are vulnerable to thepresence of any unobserved factors affecting both the ARC (or ARB) status and the outcome
variables (percapita consumption, income, etc.), but it has also been a claim in the literature that“with good data propensity score matching can greatly reduce the overall bias and outperforms
regression-based methods (Ravallion, 2001, 126).”
１１

For competing assessments of such developments within the development economics

profession, see a illuminating collection of essays published in Economic and Political Weekly:
Bardhan (2005), Basu (2005), Banerjee (2005), Mukejee (2005). See also Duflo (2006).
１２

A series of commissioned reports were published as DAR (2003).

１３

A personal conversation with Dr. Arsenio Balisacan.

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