Land Conversion: An Economic Boon or Bane in Central Luzon's Agricultural Sector

Abstract— This study explores the economic impact of land conversion on the agricultural sector in Central Luzon from 1981 to 2021, using the Cobb-Douglas production function as the analytical framework. Employing key econometric tools—such as the Augmented Dickey-Fuller (ADF) test for stationarity, Johansen cointegration for long-term relationships, and Ordinary Least Squares (OLS) regression—the analysis shows that all variables are stationary. Farm size is positively correlated with rice output, while labor use and the man-land ratio negatively affect production. The findings highlight the vital role rice production plays in the household income of Central Luzon, indicating that while it has contributed to modest but steady economic growth, land conversion has acted as an economic boon, promoting development opportunities in the region. The study concludes by urging policymakers to craft strategies that enhance agricultural productivity and ensure sustainable income for farmers, contributing to broader economic prosperity. Future research should examine the specific types of land being converted from agriculture, assess the long-term impacts on different crops, and consider how land conversion affects the region's overall agricultural sustainability. This will provide a more comprehensive understanding of the broader implications of land use changes on Central Luzon's economy.