Agrarian reform

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The most aggressive land redistribution program in the Philippines began in

1987 with the enactment of the Comprehensive Agrarian Reform Program

(CARP). Changing ownership of land is seen as an important wealth

redistribution program and a means of effecting social justice. Average

accomplishment is 57 per cent as of 1997 using as a base the revised reform

coverage of 8 million hectares.10

In the simulation the land reform project is taken to imply the full

accomplishment of the CARP in each province. The cost of the project is

based only on the cost of land acquisition. For prime lands, the average

cost is taken to be Pesos 350 000 per hectare, while for non-prime lands, it

is taken to be Pesos 10 000 per hectare. The total cost of land acquisition is

Pesos 202 billion. Assuming an economic life of 30 years the total benefi t is

estimated to be Pesos 3.3 billion, and roughly half a billion of this accrues

to the poor. The leakage rate is estimated to be 82 per cent and there will

be a reduction of poverty incidence by approximately 0.30 percentage

points. CARP accomplishment is benefi cial to the poorest four quintiles,

but detrimental to the richest quintile. However the net benefi t–cost ratio

is surprisingly low at only 0.11, due to the low coeffi cients on the agrarian

reform variable in the original model (see Table 6.5).