Land issues in poverty reduction strategies and the development agenda: the Philippines^[165] - G.M. Llanto and M.M. Ballesteros

FAO/17750/A. Conti

This paper discusses critical land issues in the Philippines and assesses the integration of those issues in the national development agenda and poverty reduction strategies. It covers issues related to agriculture, forest and urban lands, land administration and management, and government programmes on agrarian reform and housing development. Severe problems affect the land markets in the country and these arise from unclear and inconsistent land laws, policies and inadequacies in land administration and management. These inefficiencies have to be addressed to sustain growth and alleviate poverty. Land reform is the critical policy intervention in the agrarian and urban sectors. The implementation of the programme, however, has been hampered by a number of land-use and ownership issues. It has also been noted that land redistribution per se is not sufficient to promote rural development. Sustainable management of natural resources and efficient infrastructure development have to be undertaken to make agriculture viable and create balanced regional development. Some priority measures that need to be undertaken are as follows: (1) completion of a cadastral survey of the entire country and use of cadastral maps as a basis for land use and physical planning, tax mapping, and other activities; (2) identification and delineation of forest lands that can be used for agricultural expansion/activities and non-agricultural activities; (3) identification and delineation of existing and potential agricultural production areas and the provision of the necessary support infrastructure, facilities and services; (4) mapping protected areas and establishing a database on them; and (5) identification and protection of priority infrastructure rights-of-way.

INTRODUCTION

Access to land and productive inputs is a strong predictor for poverty alleviation. In the Philippines, the poor are strongly dependent on access to land for their livelihood and welfare. Three-quarters of the poor (i.e. more than 20 million people) make a living from agricultural and fisheries activities (Balisacan, 2002). Likewise, the urban poor, who account for 25 percent of the total poor population, are also dependent on land as housing provides them access to the urban economy (Balisacan, 1994). For many urban poor families, the house serves as base for income-generating activities (e.g. food vending, tailoring, processing of recyclable materials). Thus, sustainable economic activities that could address poverty alleviation in agriculture, the fisheries and in urban economy depend on an efficient and socially accepted distribution of land.

This paper's objectives are three-fold: (i) identify and summarize key land issues in the Philippines; (ii) assess the integration of those issues in the national development agenda and poverty reduction strategies; and (iii) identify steps that could be taken to improve the process. One motivation is that the presence of a well-functioning land market is a major factor in sustained growth and poverty reduction strategies. An efficient land market maximizes the use of land while well-defined land or property rights can overcome credit market imperfections, provide effective insurance against shocks, help households improve their health status and provide decent shelter. However, the Philippine land market has not been functioning efficiently. Land has been highly unequally distributed. Problems of boundary disputes, illegal occupation of state and forest lands, false titles, inappropriate land valuation, and a lack of commitment to environmental sustainability constrain the efficiency of land markets. These problems arise from unclear and inconsistent land policy and poor and inadequate land administration and management that constrain the land markets.

Recognizing the critical role played in poverty reduction strategies and the development agenda by land markets and access for the poor to land resources, the Philippine Government has crafted the Medium-Term Philippine Development Plan (MTPDP) 2001 - 2004, which outlines several reform measures in the land markets. The MTPDP seeks not only better access and secure land tenure for the poor but also efficient land-use management for sustainable economic growth. The challenge lies in resolutely implementing the identified strategies and reform measures.

The Comprehensive Agrarian Reform Programme (CARP) has been the fundamental strategy for poverty reduction and for increasing productivity in the agriculture sector. It was envisaged as the main instrument to correct inequities in land distribution and to provide secure tenure to former agricultural tenants. Unfortunately, however, the performance of agrarian reform seems to have fallen short of expectation.

The government has adopted a strategy of improving the livelihoods of poor communities and providing access to basic urban infrastructure and services to build sustainable urban communities. In this regard, the government has started to improve land administration and management. It has embarked on a long-term programme to improve the processes and infrastructure for better cadastre, record-keeping and information dissemination. Decentralization has paved the way for local governments to be responsible for the management of local resources including land. However, the government has yet to define a national land-use policy for the country that can guide the allocation and use of resources. Unprecedented urbanization in the country has put tremendous pressure on land resources, and the absence of a land-use policy underscores land conversion disputes and other land-related problems. The tension between continued use of certain lands for agriculture on the one hand, and the demand of rapid urbanization on the other, has led to conflict among various interested parties such as land developers, agricultural workers and landowners.

The paper identifies critical and priority land issues in the country, goes on to analyse how these issues are addressed in the recent National Development and Poverty Alleviation Strategies, and finally identifies key areas for action and research.

CRITICAL AND PRIORITY LAND ISSUES

Several weaknesses in land-use policy, administration and management adversely affect the efficiency of land markets, and thus the country's economic growth potential and equity: (1) unclear and inconsistent land policies; (2) an inefficient land administration infrastructure; (3) a highly politicized land tax system; (4) an inefficient agrarian reform programme; and (5) an inefficient housing development programme.

TABLE 1
Status of land classification by region (in hectares), 1997

Source: 1997 Philippine Forestry Statistics.

Unclear and inconsistent land policy

There are three categories of land in the Philippines: (i) protected areas, (ii) alienable and disposable land; and (iii) privately owned land. Of the total Philippine land area of 30 million hectares, 15.88 million are forest lands or protected areas and 14.12 million are alienable and disposable lands, which are mostly (64.8 percent) titled and privately owned (Table 1). The remaining alienable and disposable lands are patrimonial properties, which are public lands presently owned by the state for public use but which can be alienated if present use is no longer appropriate. These figures, however, do not reflect actual land use because of the unclear delineation of forest lands. Forest lands have been defined as lands with a slope of greater than 18 degrees. However, forest lands may be reclassified if they are deemed to be more valuable for agricultural use. To illustrate one dimension of this problem, existing maps indicate certain areas as forest lands but these have not taken into account the actual patterns of land use. Thus, there is a need to establish the use to which designated forest lands are actually put.

The other main issue on protected areas pertains to conflict over property rights. Protected areas are characterized as common property, i.e. they are owned by the state, but private parties or groups through arrangements such as leasehold can enjoy usufruct rights. Philippine land law by virtue of the Indigenous People's Rights Act (Republic Act 8371 of 1997) recognizes, protects and promotes ancestral domain rights, i.e. preconquest ownership of protected lands by tribal or cultural communities.^[166] The enactment of this law raised some property rights issues. For instance, with regard to mineral lands, the Philippine Constitution under the principle of Jura Regalia provides that all natural resources, particularly minerals, are owned by the state. On the other hand, under the Indigenous People's Rights Act ancestral domains include mineral lands, so indigenous peoples or cultural communities have claims of ownership over those lands. Some sectors have interpreted the indigenous people's property rights as superior over other rights, e.g. concession rights, which the government can grant through the market economy's land registration and titling system.3

Another weakness of Philippine land policy is the failure clearly to identify society's preferences regarding land use. The transcending importance of efficient land use to society is well understood but the political economy of establishing social preferences regarding land use is problematic. Thus, significant problems arise in the use and allocation of land, e.g. the continuing tension behind the conversion of agrarian reform lands to non-agricultural use. Thus, without a clear and consistent land-use policy, the government finds itself in a policy bind: sometimes supporting sectors that would favour agricultural use over urban use, and on other occasions favouring those sectors that demand land for housing, business and other non-agricultural uses.

Various laws have been enacted for the classification or reclassification of lands into different uses. In particular, the laws paramount to land classification are the following: (1) Presidential Decree 399, which reserves strip lands along highways or public roads for human settlements and other non-agricultural uses; (2) Republic Act (RA) 7279, which defines urban lands and lands with potential urban use and reserves them for urban development and social housing purposes; (3) RA 7916, which identifies areas reserved for economic zone development and prescribes the manner of identifying such areas; (4) RA 7160 (local government code), which provides for the mechanism for apportioning agricultural lands at the local level; (5) RA 6657, which provides restrictions on the classification of agricultural and agrarian lands including protected areas; (6) RA 7357 3 In January 2001, the Supreme Court upheld the constitutionality of Indigenous People's Rights Act, which legalizes the issuance of the Certificate of Ancestral Domain titles and the Certificate of Ancestral Land titles. However, there is still a need to reconcile with other government agencies on the extent of ancestral domain and on development programmes for these areas. and 7668, which reserve certain lands for tourism development; (7) RA 8435, or the Agriculture and Fisheries Modernization Act (AFMA), which identifies a network of protected areas for agriculture and agroindustrial development, in effect impinging on existing laws on protected areas under the Department of the Environment and Natural Resources (DENR); (8) RA 8850 or the Philippine Fisheries Code, which has provisions that run counter to earlier laws defining the utilization and disposal of mangroves; (9) RA 8370, the Indigenous People's Rights Act, which recognizes ancestral domains on lands including mineral lands and gives priority rights to indigenous peoples; and (10) RA 7942 Mining Act, which provides that all natural resources, particularly minerals, are owned by the state. There is a need to review these laws in order to craft a consistent and socially acceptable land-policy framework that supports the requirements of sustainable economic growth, equity and poverty alleviation.

Inefficient land administration infrastructure

The land administration infrastructure in the Philippines, including the land information system, is poor and inadequate. Information about landownership, location, boundaries, actual land uses and land values cannot be provided systematically by many local governments. One result is fraudulent land titling that causes landownership conflicts, and takes years to resolve. In particular, the Philippine land administration system has the following characteristics.^[167]

1. There are 19 agencies involved in land administration but their operations are not coordinated and information integration is poor. There is considerable overlap and fragmentation of institutional responsibilities among land agencies, e.g. the Land Registration Authority under the Department of Justice, and the Land Management Bureau (LMB) under the DENR. There also seems to be no institutional mechanism in place to resolve conflicting issues.

2. Major land administration laws are outdated and some are not in accord with recent land-use legislation. For instance, on land registration, the governing law is the Property Registration Decree (Presidential Decree 1529 issued in 1978). The law is comprehensive yet it no longer addresses some of the weaknesses of the current land administration system. All title disputes (including smallest corrections on title) have to go before the courts. This has caused widespread delays and has invited abuse.

3. Existing management of land records is inefficient. There are limited inventories of land records. A large proportion of records are missing because of destruction from war, theft, and damage from fire and water. Some were also misplaced during frequent transfer of records. Many of the remaining records are in a fragile condition and some may have been illegally altered.

4. Cadastral information is inadequate. There is no complete set of cadastral maps that show titled and untitled properties and the boundaries of private, public and forest land parcels. The most convenient way for a person to obtain information about the land is to visit the site, make enquiries and have the land resurveyed to check boundaries.

5. Information in the Land Registry is not easily accessible. Title records in the Registry of Deeds, which is the ultimate repository of land titles in the country, cannot be matched with parcel or cadastral map numbers. The LMB, under the DENR, keeps the original cadastral surveys and record maps while the Land Registration Authority under the Department of Justice keeps copies of subsequent surveys on titled property and the municipal index maps. These maps neither show nor match the cadastral information stored with the LMB. Because of this mismatch, problems of duplication or overlap are not easily detected. The system of access is also manual, and hence inefficient. A corollary to this is the fact that some land title records have not been updated. Ownership titles issued in the past have not been perfected into the Torrens registration system and records of these ownership titles are not available.

6. There is an absence of a national standard and method for real property valuation. Several systems and methodologies are applied in the valuation of real properties. Thus, property valuation varies depending on the purpose for which land is being assessed. There is valuation of land for real property taxation, for compensation of land acquired for public investment and valuation under the CARP. The private sector also provides its own valuation for the purposes of bank lending, insurance, purchase and sale of real property by investors.

The inefficient land administration system results in high transaction costs in securing, registering and transferring property rights. There is no efficient mechanism to resolve land disputes, and the land administration system does not generate reliable information needed by the courts to hear land cases. Also, the high cost of registering land discourages registration and consequently investments on land.

Poor land administration can erode public confidence and trust in the titling and land registration system and this puts the poor, especially, at a great disadvantage. Under the current land registration system, it takes from six months to several years to obtain original titles and several weeks to a few months to register subsequent land transactions (World Bank, 2001c). The percentage of untitled lands in rural areas is high, estimated at approximately one third of land parcels in rural areas. Informal land transactions to obtain access to land are the only avenues left to the landless. In urban areas, this is illustrated by informal settlements or squatting.

A system of land planning has been instituted to manage land resources in the country. In 1978, a comprehensive system of permits and licensing was implemented. This system involved drawing up town plans in every municipality. However, the town plans of most municipalities and cities were inadequate and useless as a basis for guiding urban growth. Many town plans were found to be technically unsound (FAO, 1993). These are mainly physical plans prepared for built-up areas with an unclear basis for land allocation. With the shift to a decentralized system of governance in 1991, the formulation or updating of comprehensive plans has become the responsibility of local government. However, land-use planning remains inadequate because local governments generally lack the capacity and resources for planning, mapping, environmental and waste management. At the end of 2001, only 10 percent of the total municipalities and cities in the country had updated town plans (Housing and Land Use Regulatory Board). About 38 percent have no town plans and the rest have plans that have not been updated. Aside from the lack of sufficiently skilled technical staff at the local level, city and municipal planning offices face budgetary constraints. Completing a comprehensive municipal or city land-use plan costs about US$100 000 and involves more than a year of study, planning and public consultation. The political returns may be too small given a political cycle of only three years for elective local officials (World Bank, 2001c).

There is a weak link between land use and infrastructure planning of government. In March 2000, a National Urban Planning Agenda (NUPA) was formulated to provide policy directions and measures that will address urban development concerns. The NUPA is comprehensive and integrated, promoting urban - rural linkages and private-sector participation in urban development issues. A National and Regional Physical Framework Plan that integrates physical planning at the national and regional levels supported it. However, these plans have yet to be put in action.

In the absence of clear land-use plans, urban development has been poorly managed and industrialization is seen to be competing with the goals of agrarian and land reform laws in the country. Although a National Land Use Interagency Committee has been created to address problems of land allocation, utilization and management, and to help resolve landuse conflicts, the committee has limited powers (i.e. no quasi-judicial powers). A draft National Land Use Act prepared by the committee to provide a mechanism for the implementation of a national land-use policy has been languishing in Congress.

Highly politicized property tax system

Because the cost of holding idle, unimproved land in the country is minimal, there are opportunities for land speculation and concentration of landownership. An appropriate land tax system may be needed for efficient land markets. Although the property tax system is well designed, land taxation is not used effectively to generate revenue or to encourage active land markets. The authority to impose land taxes lies with local government units, who share out revenue according to a fixed formula. Provinces can impose taxes up to 1 percent (2 percent in cities) plus a special education surcharge of 1 percent of the assessed value. Local government can also impose an idle land tax of up to 5 percent of the value of the land. In addition, capital gains taxes (6 percent of the gross selling price or fair market value, whichever is higher) are also paid from sale of lands. The implementation of these taxes is, however, poor. This is partly blamed on inefficient land valuation, but the significant factor is political. A landowner-dominated local council may not support efficient land taxation, including the periodic assessment of land values to establish an appropriate tax base. Political pressure may also come from local businessmen or banks in possession of foreclosed lands. Thus, local government effort may largely be confined to town planning without the opportunity to raise local revenue through schemes such as idle land taxation, betterment levies and land conversion tax.

On the other hand, the implementation of the idle land tax has been neglected despite provisions in the law that mandate local governments to keep a record of idle lands within their jurisdiction (section 239 of the Local Government Code) and to impose a tax on idle lands at 5 percent of the assessed value of the property (sections 236 and 237 of the Local Government Code and section 42 of the Urban Development and Housing Act). Monitoring of idle lands has not been performed and only one municipality so far has implemented the idle land tax.^[168]

The efficient allocation of lands to their best use has been constrained by relatively low tax burdens. This practice has encouraged land speculation and undermined the generation of significant revenues for landownership. It also provided an incentive to overvalue real property and underestimate propertyrelated risk. Dubious and contested land valuations have also caused long delays in the implementation of government and private-sector projects because of court contests. In particular, this has significant implications on infrastructure development in the country. A major factor that causes delays in infrastructure completion is the acquisition of a right of way (Manasan and Mercado, 2001). Inefficient land valuation has persisted as a major issue. Different agencies have provided widely disparate estimates of land value. For instance, the Bureau of Internal Revenue (BIR), the Local Government Assessors, the Bankers Association of the Philippines and the different private realty appraisers' associations all tend to apply different values to the same property. The courts have been asked to resolve the disagreements on valuation but this has caused further delays given the slow pace at which land expropriation cases are resolved, and the backlog of court cases that are not devoted solely to propertyrelated problems.

Congress recently approved Republic Act 8974 and Republic Act 8975, which intend to expedite acquisition of rights of way. Republic Act 8974 upholds the Bureau of Internal Revenue's zonal valuation as a basis for the computation of "just compensation" for the acquisition of rights of way. Courts are given 60 days to determine just compensation in cases when no such zonal valuations are available. On the other hand, Republic Act 8975 prohibits the Lower Courts from issuing restraining orders and injunctions on infrastructure projects. These laws, however, only address the acquisition of rights of way. Different standards in land valuation still remain a big problem in the land markets.

Inefficient agrarian reform programme

In the 1970s, the government embarked on a land-reform programme as a critical policy intervention for growth, and the provision of equity or alleviation of poverty in the rural sector. This programme consisted of both tenancy reforms and land redistribution programmes. The tenancy reforms ruled out the practice of share tenancy, regulated the leasehold rent, and protected tenants. The Land Redistribution Policy set a ceiling on the maximum size of a landholding, and transferred the right to ownership of land larger in area than the ceiling to the actual tiller, who was to mortgage the property to the government for compensation payments to the landlord. The former tenants were to amortize the mortgage with the government over a long period.^[169] The programme was initially limited to rice and corn under Presidential Decrees 2 and 27. In 1988, Congress enacted the Comprehensive Agrarian Reform Law (CARL) that expanded coverage to include all private and public agricultural lands regardless of the type of commodity produced.

TABLE 2
Poverty incidence by location

Source: Reyes (2002).

TABLE 3
Incidence of poverty in beneficiaries of agrarian and non-agrarian reform 1990 and 2000

Source: Reyes (2002).

The land reform programme in the country seems to have been successful in promoting social equity through the transfer of lands to landless or tiller farmers. Studies show that distributional reform has had a positive impact on yield, specifically of rice. The impact is highest in lands where technical change, e.g. adoption of high-yield varieties, has occurred (Otsuka, 1991). Recent studies also show that agrarian reform has had a positive impact on poverty alleviation (Reyes, 2002). The incidence of poverty among beneficiaries of agrarian reform has been observed to be lower than among other beneficiaries (Table 2). There has been a decline in the incidence of poverty among agrarian reform households from 47.6 percent in 1990 to 45.2 percent in 2000 (Table 3). In contrast, the proportion of poor households among non-agrarian reform beneficiaries has increased from 55.1 percent in 1990 to 56.4 percent in 2000. There was also a greater proportion of beneficiaries of agrarian reform who came out of poverty.

The downside is that agrarian reform has constrained the rural land markets and has placed restrictions on the trading of agricultural lands (Llanto and Estanislao, 1993). The law prohibits lands acquired by beneficiaries from being "sold, transferred or conveyed except through hereditary succession or to the government for to period of ten years" (Sec. 27 RA 6657 of 1988). It also prohibits banks from foreclosing and owning properties secured by emancipation patent or certificate of landownership award. If an agrarian reform beneficiary is unable to pay a bank's loan, the bank has to turn over the emancipation patent or certificate of land award to government, which should dispose of the property to another agrarian beneficiary. The net effect is an inactive formal agricultural land market. A curious phenomenon is the rise in transactions in the informal land markets, such as buying and trading of usufruct rights to the agrarian reform land. Another deleterious effect is the drying up of credit to agriculture because private financial institutions refuse to lend to agrarian reform beneficiaries under the conditions imposed by the law. The credit markets see the emancipation patents and the certificate of land award as imperfect instruments of ownership and as very poor substitutes for the traditional transfer certificate of title. The tedious processes of registering emancipation patents and certificates of land awards as transfer certificates of title compound the situation. The lack of credit, inadequate infrastructure and the inability of land markets, among others, to respond to the best economic opportunities constrain the potential growth in agriculture productivity envisaged under the agrarian reform programme. This translates into lower land values for these lands that further erode the acceptability of those lands as loan collateral to the banks.

TABLE 4
Land redistribution accomplishments by year (000 hectares)

Source: DAR Planning Service.

The slow distribution of agricultural, particularly private, land has also hampered the rural and agricultural land markets (World Bank, 2001a). The Department of Agrarian Reform (DAR), on average, has accomplished only 70 percent of its target from 1987 to September 2001 and most redistributed lands are public agricultural lands (Table 4). One constraint is the lack of finance. The finance problem arises not only because of the huge fiscal deficit but also the inefficient financial structure of the agrarian reform programme. There is a mismatch between the mode of compensation to landowners and the payment of beneficiaries. Landowners receive a cash payment equivalent to 25 - 35 percent of the total value of land and the balance is paid in government bonds with a maturity of ten years. On the other hand, beneficiaries amortize the loan for a period of 30 years. Moreover, in the event of foreclosure, the law provides a redemption period of two years for the original beneficiary or their heirs to recover the property.^[170] In the event of transfer to another beneficiary, the original beneficiary has to be reimbursed in cash, the amount paid on the property plus the value of existing improvements that have been made on the land. The repayment performance of agrarian reform beneficiaries has also been poor. All these conditions place the government's fiscal position at high risk.

Other factors that contributed to the slow redistribution of private lands are presented below (Adriano, 1994).

(1) Cumbersome and slow land valuation. Land valuation takes time because of a lack of information for the accurate assessment of the price of land and the need to conform to the valuation indices specified in the CARL. Extensive field and secondary research have to be done, and with the limited resources (staff and budget) at the Land Bank of the Philippines (LBP), the process has often encountered significant delays.^[171] Cost sharing among the agencies involved in agrarian reform and the LBP is not practised as the latter makes an independent land valuation. Each agency carries out its own field investigation. The DAR conducts field surveys to identify the landowners and prospective farmerbeneficiaries and the area to be covered for reform. It also gathers data relating to land (e.g. production data). The DENR also carries out its own field investigation to look into the CARP and non-CARP areas and boundaries. The LBP gathers the same information as the DAR and the DENR. The DAR's formula for computing "just compensation" has changed three times between 1988 and 1992. Compounding this problem is the lack of standardized definitions of what should be covered by the CARP and of who has the final decision in determining land value (i.e. the DAR Adjudication Board decision vs LBP's estimate). Each agency also requires different documentary requirements.

(2) Bureaucratic documentation and difficulty of coordinating land-reform activities. The presence of problematic lands and lands without proper documentation also hampered the programme. A significant proportion (21 percent) of the 1.2 million hectares of the CARP scope is composed of problematic land. This is land over which there are ownership conflicts, or conflicts regarding the actual area of land that is covered by agrarian reform. It is possible that portions of a land parcel have been covered by an exemption (i.e. the land has been classified as non-agricultural). Other CARP lands have no proper documentation (18 percent). There are also CARP-identified lands that have to be validated because of possible errors in the identification of the land (33 percent). Some of these lands may not be covered by the comprehensive agrarian reform programme and therefore fall out of the scope of the CARP.

(3) Counterclaims by landowners at the DAR Adjudication Board and a failure to install agrarian reform beneficiaries on awarded lands because of unsettled and pending cases of counterclaims by landowners at the DAR Adjudication Board.

(4) The opposition of some local governments to land acquisition and distribution and their bias for land conversion in view of higher tax revenues from lands devoted to non-agricultural use.

(5) Regulations on land conversion issues are unclear.

While these issues await resolution, the agrarian reform lands remain outside transactions in the formal land markets, although informal transactions such as buying and selling of usufruct rights over the lands in question have emerged as a response to non-existent formal land markets.

Another issue that merits close investigation is the impact of natural resource degradation resulting from indiscriminate conversion of forest and agricultural lands to urban use. Farming has become unprofitable in those agricultural areas. Forty-five percent of the country's land area suffers moderate to severe soil erosion. Agricultural yields in the lowlands are stagnating, increasingly beset by salinity and waterlogging. Moreover, forest cover in the Philippines has been substantially reduced over the last 40 years because of shifting cultivation, increasing urbanization, illegal logging and forest fires. Coastal areas are deteriorating owing to marine- and land-based pollution. The country's coral reefs are under threat from siltation, pollution, overfishing and destructive fishing techniques. Mangrove forests are also disappearing rapidly because of conversion to aquaculture and indiscriminate cutting for firewood and construction. There has been an increased pressure on marine fisheries over the last 20 years from a rapidly growing population and a rise in exports of marine products such as shrimps.

There are incentives to land conversion and even beneficiaries of agrarian reform are tempted to part with their land for the right price - a price difficult to match with earnings from agriculture. Potential agrarian reform beneficiaries would want land distribution to go on because land has become even more of a tradable asset but not necessarily for agricultural reasons. A major danger of this is that it can potentially lead to rural squatting. We may be witness to a new crop of landless rural households because of the sale of "rights" to agrarian land. In addition, the urban political economy may, with an accompanying rapid urbanization, have created a shift from the traditional protagonists in land-tenure issue (i.e. landowner vs tenant) to farmers vs real estate developers/new landowners; farm workers vs industrial plantation owners; community vs capitalist entrepreneurs, etc. The inefficiency in rural land markets may contribute to this phenomenon.

Inefficient housing development programmes

An Urban Land Reform and Housing Programme through the Urban Land Reform Act of 1978 (Presidential Decree 1517) has attempted to provide opportunities for informal settlers to own lands that they have occupied to prevent unreasonable increases in the price of urban lands. However, the practice of identifying urban land reform sites was discontinued in 1989 because of opposition from landowners and the regressive effect of the law on land markets. Problems of multiple ownership, land valuation, refusal of landowners to sell property, or refusal of some informal settlers to pay for the property, have hampered urban land reform efforts. Instead, the government scaled up community-based housing programmes to provide the landless urban poor with access to and secure tenure on urban lands. One of these programmes is the Community Mortgage Programme (CMP) that provided low-cost financing to organized household communities for land acquisition and development. The CMP has mixed results. On one hand, it has enabled informal settlers to purchase the lands they occupied, thus obtaining some form of secure tenure. On the other, CMP's sustainability is doubtful because of the informal settlers' poor loan repayment performance. Several shortcomings have been noted, and are discussed in detail by Lee (1995):

1. the programme does not always provide a realistic option for addressing tenure concerns because either some landowners have no intention of dealing with the community or some communities lack the requisite negotiating skills;

2. while the CMP is designed mainly to help squatters on private lands, it does not offer much help to low-income renters who also might want to have secure tenure through ownership;

3. the main benefit from CMP is access to land but it does not meet problems of slum upgrading and provision of basic services or infrastructure.

However, a bigger issue is the unintended incentive created by the Urban and Housing Development Act of 1990, which provided squatters quasi-legal rights over lands. One observation is that the law has encouraged the development of informal urban land markets (Baross, 1993). It has motivated outright occupation and possession of both public and private lands as a common mode of "acquiring" those lands.

Land markets have been constrained by the presence of a third party that has no legal claim over possession and enjoyment of the land but only quasi-legal or de facto rights over use of the land. The presence of squatters has increased transaction costs in the land market. Evicting them is no easy task. The law entitles squatters to due process before eviction and demolition can be undertaken. Litigation, however, is a slow and tedious process. Squatting cases take years to resolve. Enforcing a court order is even more difficult. Local governments are obliged to carry out eviction orders, but they cannot easily implement these orders because the Urban and Housing Development Act first requires them to find resettlement or relocation areas for squatters. Under this law, resettlement and relocation can be carried out only under a court order and only when preliminary conditions, i.e. relocation site, fair compensation to the squatters, availability of basic public services at the relocation site, etc., have been satisfied. Many local government units neither have the resources nor the sites to relocate the squatters. There is also an incentive problem on the part of some local officials who are reluctant to carry out this responsibility because of its implications on their local election chances. The squatters represent a big block of voters from which local officials can draw their electoral support.

POLICY REFORMS AND STRATEGIES THAT ADDRESS CRITICAL LAND ISSUES

The MTPDP provides a comprehensive and integrated approach to poverty alleviation focusing not only on providing access and secure land tenure but also on preserving the productivity of land resources through better management. To address landcritical issues the following need to be done: (1) expand access and secure tenure; (2) promote sustainable management; (3) accelerate infrastructure development; and (4) improve land administration and management.

Expanding access and secure tenure^[172]

Land distribution and disposal under the CARP is envisaged to be completed during the period 2001 - 2004. An important measure that will facilitate its full implementation is the completion of forest land demarcation. Forest land demarcation shall establish the forest limits and total agricultural lands and settle issues relating to the current utilization of forest lands for agricultural purposes and the release of marginal forest lands for agricultural purposes. Other support measures are: (1) strengthening the database and information system to facilitate planning and monitoring of agrarian reform areas and beneficiaries; (2) partnerships with peasant organizations, non-governmental organizations, people's organizations, local governments, and landowners for advocacy and budgetary support; (3) identification of other funding sources to finance private land distribution; and (4) speedy delivery of agrarian justice by strengthening the Department of Agrarian Reform Adjudication Board.^[173] Improvements in land administration and management to be spearheaded by the DENR shall complement these measures.

TABLE 5
ARCs launched, by year

Source: DAR Planning Service.

The creation of Agrarian Reform Communities (ARCs) is expected to provide a more effective mechanism for delivering support services to agrarian reform beneficiaries. Support services include capacity-building, credit, infrastructure and livelihood, intended to enhance smallholder productivity. About 1 313 ARCs have been established all over the country (Table 5). These ARCs consist of about 75 percent of total ARB households.

Some policy issues pertaining to the implementation of the agrarian reform have still to be addressed. Experiments with "negotiated" or market-based land reform are being carried out in Latin America, South Africa and Thailand with assistance from the World Bank (Deininger, 1999). This scheme, which relies on voluntary land transfers based on negotiation between buyers and sellers, and where government's role is limited to mediation and subsidy, is expected to facilitate land redistribution and lessen the government's financial burden.^[174] The other policy issue to consider is that land redistribution per se cannot guarantee efficient and viable small-scale family farms. Additional policy reforms are needed, including reforms removing distorting subsidies or taxes and providing adequate access to markets for reform beneficiaries (Balisacan, Fuwa and Debuque, in press). The urbanization of the countryside and the "premature" conversion of agricultural lands to non-agricultural uses have to be addressed. One reason for this premature conversion has been the long delay in the implementation of agrarian reform. On the other hand, this could also be because of the lack of a clear and consistent policy and legal framework over land use.

Access and secure tenure for shelter will be expanded in urban areas. The housing programmes have a bias in favour of homeownership regardless of the households' economic capacity (Llanto, 1996; Llanto and Orbeta, Jr, 2001). This bias rests on false assumptions of housing demand. Not everyone can afford to buy and own a house. Society's real problem is how to provide access to affordable, secure and decent shelter. Thus, households should be given a choice between ownership through purchase or private transfers, renting private units or accessing public rental housing targeted for certain sectors of society. The government's strategy now is to focus on community-based housing programmes for the lowest 40 percent of the income distribution. The government also has earmarked parcels of public lands that are informally occupied for distribution to the urban poor. The main benefit from these programmes is improvement in tenure status of squatters. Infrastructure improvement remains a problem and will certainly be a major challenge in the development agenda.

In the case of renting, the provision of low-cost rental housing is encouraged. Efficient rental markets will be promoted through incentives for private-sector participation, provision of on-site and offsite services and adoption of rent-to-own schemes.^[175]

Promotion of sustainable management^[176]

The degradation of natural resources and the declining quality of coastal and marine environments contribute to low productivity in agriculture and fishery. Four key strategies to sustainable development are the following: (1) integrating environmental concerns in planning and decision-making at all levels of the administration; (2) broader participation of stakeholders in the management and protection of natural resources; (3) equitable access to productive resources and resources by the issuance of ancestral domain titles to indigenous peoples; and (4) promotion of technologybased production in forestry and natural resources. The enactment of the AFMA in 1997 has initiated actions along these strategies. The law spelled out specific principles and guidelines for irrigation and watershed development, the devolution of communal systems to local governments and private participation in development of irrigation systems. Strategic Agriculture and Fisheries Development Zones (SAFDZ), which are suitable agricultural areas, have been identified to be protected from unreasonable land conversion. Each SAFDZ will have an integrated development plan, complete with infrastructure and marketing programmes, which will be incorporated into the local agriculture and fishery modernization plan.

The government has shifted to a policy of contract reforestation in 1988 in lieu of
issuance of licences to cut down timber. Massive contract reforestation efforts undertaken between 1989 and 1993 revealed a significant improvement in survival rate (76 percent) in contrast to the 26 percent rate of government reforestation efforts. In 1995, government also shifted from government-managed forestry to community-led forest management. About 4.9 million hectares of forest lands have been under community management since 1998 compared to only 32 000 ha in 1982. This community-oriented forestry initiative has allowed for longer tenure and has provided an incentive towards conservation and sustainable management of the remaining forests. By 2004, government intends not only to increase forest lands under community management but also to recognize and issue certificates on ancestral domain claim areas.

Accelerating infrastructure development

Infrastructure, including transport, water supply, power and education, health and other services, supports economic and other social activities. Infrastructure development is a major priority as it will support the modernization of the agricultural sector, tourism and the objective of pursuing balanced regional development. The infrastructure requirements of the country remain large, so several strategies will be pursued to accelerate infrastructure development.

(1) The government shall increasingly rely on the private sector to fund the huge investment requirements, specifically for transport, power and water. Government financial assistance will focus on socially and economically desirable but financially unprofitable investments. User charges and fees shall be adjusted to encourage private-sector participation while at the same time allowing the poor to have access to basic infrastructure.

(2) Integrated planning and improved coordination among government agencies and the private sector address diverse issues in developing infrastructure (e.g. rural - urban linkages, access for the poor to basic infrastructure service, environmental and safety regulations). Infrastructure development will be linked with physical regional planning to achieve spatial organization and balanced regional development.

(3) Investments in infrastructure will shift from the highly developed megaurban centres, like Metro Manila, to designated regional growth centres. This shall stimulate development of the countryside and relieve the pressure of rapid rural - urban migration on infrastructure services.^[177] Efficient transport networks linking Metro Manila to major industrial centres shall increase the supply of urban lands and increase the areas that can serve as alternative investment sites to Metro Manila. This can lead to a reduction in urban congestion and to tempering increases in land and housing prices in urban centres, principally Metro Manila.

The Land Administration and Management Project

The Land Administration and Management Project (LAMP) is the government's first step towards the implementation of a long-term (about 15 - 20 years) land administration and management programme. This programme, which was initiated in 2000, aims to foster efficient land markets through the development of a system of land titling and administration based on clear, transparent, coherent and consistent policies and laws supported by appropriate institutional structures. Initially, a threeyear programme will be undertaken, which will consist of three components: (1) the conduct of land policy studies that will look into property valuation, finance and fee structure, fragmented land laws and institutional arrangement in land administration; (2) pilot testing of innovative solutions on collaboration on land administration and title reconstruction and record management; and (3) institutional development in project management and monitoring.

Institutional support for the project has already been set up. Prototype 1 on land titling and administration, specifically cadastral index mapping, has shown significant progress (Table 6). The one-stop shop has been launched and the infrastructure and operational support completed. Prototype 2, which is being implemented in Manila, shows comparatively slow progress. In cadastral mapping, very slow progress was made in the retrieval of titles from the registry of deeds. Field validation of reconstituted titles has also been slow because residents have not been receptive. Only 17 percent of the targeted households responded. Delays in release of funds have also been experienced because of the frequent changes in the administration of the DENR, the lead government agency in the project. Except for some problems in title reconstitution at Quezon City, the other components of the project are proceeding successfully. The continuing success of the project, however, will depend largely on the political support of succeeding administrations and the public. Some sectors are still apprehensive of the project because it is seen to favour the landed. The perception is that LAMP is too focused on ensuring the efficiency of the land titling system while the issue of land redistribution is not given importance.^[178]

CONCLUDING REMARKS

While the MTPDP presents a comprehensive approach towards integrating land issues into poverty reduction strategies and the broader development agenda, much more remains to be done in the actual implementation of the identified strategies, in producing the resources to fund the development measures and in harmonizing different vested interests towards addressing problems of growth and poverty reduction. Severe problems affect the land markets in the country. These arise from unclear and inconsistent land laws and policies, and inadequate land administration and management. There is a need to review the legal and policy framework affecting land resources, including the institutional arrangements that are the basic infrastructure for efficient land markets. The government has implemented land programmes in the agrarian and urban sectors, but serious attempts to address land problems in those sectors have been constrained by a number of issues. There is a need for an in-depth analysis of these issues, most especially a clear articulation of land-use policy and societal preferences in respect to the use of land resources. In particular, there is a need to evaluate very closely the impact of agrarian reform on land markets and on economic growth, review its implementation to solve bottlenecks and avoid further deadweight loss burdens on the economy.

The establishment of an integrated land information system for efficient land administration and management is crucial. The prolific data generated from land classification, geodetic controls, land use, cadastral surveys, land titling and land registration, and from various administrative, legal and fiscal aspects of land need to be processed into meaningful, accessible and comprehensive information over defined geographical locations. Specifically, this would require national benchmarking activity and the establishment of a unified database.

Given the finite and irreversible character of land as well as its function as an economic base, it is critical to provide a consistent policy, legal and institutional framework that will encourage efficient allocation, use and management of the land. Some priority measures that need to be undertaken are as follows:

• Completion of cadastral survey of the entire country and use of cadastral maps as bases for land use and physical planning, tax mapping, and other activities.

• Identification and delineation of forest land that can be used for agricultural expansion/activities, and nonagricultural activities, particularly that of housing, tourism, industry and other settlement expansion areas.

• Identification and delineation of existing and potential agricultural production areas, based on regional supply and demand requirements and productivity trends, and subsequent protection of such areas from conversion and identification and provision of necessary support infrastructure, facilities, and services.^[179]

• Mapping the boundaries of protected areas, including disaster, hazard, and risk-prone areas, establishing a database for such areas with appropriate development limits and specifications. Identification and protection of priority infrastructure rights of way.

TABLE 6
Land Administration and Management Project Project Status Report, 2001

Source: LAMP Project Management Office, DENR.

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