We will be approaching a global population of 8.5 billion in 2025. Feeding them will place great stresses on land use and water supplies. The world will have an economy perhaps a half as big again as today, with only slightly lower unit input requirements: demand for metals, energy and the means to dispose of wastes will be greater than today. The consequences of these trends are expected to appear as gradually increasing prices, economic volatility and environmental degradation.
WHAT IF this is not at all gradual? WHAT IF we face several perhaps unrelated, perhaps systemic systems collapses? How does the world react, and does this lead to solidarity, or to bilateral deals, block formation and autarky? Does it pay to collaborate or to grab what you can?
Please note that 4: Geopolitics is relevant here, but asks a separate question.
See this another way. WHAT IF something very 'Black Swan-like' occurred: we are contacted by extra-terrestrials. We all go on to 'war footing' – and we all work together to protect ourselves from an enemy greater than any nation-state. What if we saw the current environmental issues this way? Then we might be able to work together globally in the best interests of all, rather than tribally or nationally or regionally….
My main thoughts are that the issues we face require solving by a group that we don't (yet) have. If someone from outer space arrived on Earth and asked to speak to the Manager or the Leader… we don't have one. If we can together come up with such a group that works in all our best interests, then we stand a chance of solving our current problems. We must engage a diverse group of people – the more diversity, the better our chances of success, innovation and creativity. But, that means not the usual suspects and those in power at the moment would have to – at the very least – share that power with others.
There are three inextricably interconnected global challenges:
Changes to any one system will affect the others, potentially in ways that we have not yet foreseen.
There is an awful lot going on at the governmental level of which most people are not aware. It is often expressed in abstract language and - in my view unfortunately - it tends to pull in everything from development to the inclusion of disadvantaged people in the developed world. Rio 2012 was a confection of pressure groups - "Women for Forests" - and the goals which it adopted were equally general, sometimes areal and abstract. Climate change and village drainage were mentioned in the same sentence, so to speak. I personally lost patience with this and resigned my job some time ago.
The logic seems to be this. We are (undoubtedly) living on the Earth's capital and not its "interest". Our bank account is emptying. The IUCN says that about 30% of amphibians, 21% of plants and 25% of mammals are threatened with extinction, chiefly through habitat destruction or in the case of fish, over-exploitation. Almost all world fisheries are either over-exploited or essentially barren. The main stimulus is a combination of economic and population growth. The chief agent of environmental degradation is food production: farming and fishing. The solutions, other than losing five or so billion people, is to do more with much, much less.
This is an economic-technological issue, with no genuine solutions in sight that are not already being deployed. Many environmentalists oppose technologies that offer solutions - nuclear power, gene modification, even advanced water management ("market oriented and elitist") - and many perceived problems, such as water, metal and energy shortages are not truly "environmental". That makes it an economic-political-technological set of problems, all plonked into the hands of people who will always turn a sentence into a book.
There are, however, no energy supply solutions that answer to all needs: low emissions, low cost, diverse or domestic supply. Consequently, politicians back this or that and then drop it when it becomes costly or otherwise difficult. There is no approach to agriculture or fishing, save intense regulation and policing - that will secure our biodiversity. Yet only 17 nations hold 70% of the overall biodiversity - Brazil alone has 12%. It has managed to protect half of the Amazonian rain forest and is responsible for 70% of the world's new reserves created in the five years to 2008. Now, however, its politicians are back-tracking, under intense lobbying.
Markets are entirely capable of delivering the sort of pressure that will oppose back sliding and generate an outcome. However, markets are not the same thing as business, and business lobbying will follow traditional advantage until the rules change. How might they change?
There are two views, both of them in my perception largely ineffectual.
"Ethical" companies are also supposed to be nice to people. Rio adopted goals that, if translated into regulation, would considerably lessen recruitment, training and productivity drives in commerce. Instead of minimising labour costs, they will be asked to try to increase jobs, and notably jobs for those least useful to them. The reasons are understandable, essentially transferring costs to the state to commerce in the hope that enough training will make the problem go away. But is this "environmental"? Of course not.
That said, the "ethical corporation" is being backed by the notion of "ethical national accounts", into which economic, social and environmental apples and pears are going to be packed. If this could be achieved, it could in fact be a powerful tool, a balanced scorecard for the health and wealth of nations. But, and it is a big "but", how this is to be done - and what is to be included - is not at all clear. Consider the famous Utilitarian movement, where the goal of the state was " the greatest good for the greatest number". If two policies exist, one of which delivers 100 units of Utility to one person and the other, 1 unit delivered to a hundred people, then which of them is to be preferred? More to the point, why is it to be preferred? The need for the "why?" shows that Utilitarianism is not a complete model. The exact same issue is true of ethical national accounts. How many penguins trade for how many hectares of virgin rain forest, or tonnes emissions abated? Why?
So, nice idea, pity about the execution. Actually, a real big pity because market solutions would indeed do the business, to the extent that it can be done at all. 2040 will see most lives intensely circumscribed as a result of environmental constrains. At best, the world will look like the Netherlands, or Singapore - densely populated, highly cultivated, urbanised, with its wild life constrained to patches and reserves. "Wildernesses", like tourist attractions will be artificially maintained, costly to enter and require anything from training in how to do no damage to certification of offsetting environmental savings. At worst, it will be a mad scramble to beggar your neighbour over the last reserves of this or that.
Comment 2 and environmental accounting.
Cambridge U has done work for the UN The International Human Dimensions Programme on Global Environmental Change on a balance sheet approach to natural capital. It is not the same thing as environmental accounting, but is step down that road. The group were asked to look at three stocks in twenty countries. (Note: GNP is not a stock, it is a flow.)
Quote from the study:
We measure wealth by studying various assets that can be grouped into the following four categories: human capital, manufactured capital, natural capital, and health capital. (Health is treated separately from human capital for a matter of exposition).
There are additionally three adjustments made to these accounts:
(1) potential damages that climate change may cause to the wealth of a nation;
(2) the study of how increases in oil prices may benefit (or harm) some countries in building other capital forms; and
(3) the role of technical progress as reflected by the change in total factor productivity.
Human capital is primarily captured by measuring the population's educational attainment and the additional compensation over the training period, while the shadow price per unit of human capital as used in the report is obtained by computing the present value of the labor compensation received by workers over an entire working life. [...]
Calculations of manufactured capital are based on the Perpetual Inventory Method after setting an initial capital estimate. [...] Natural capital assets in the report are comprised of the following five categories:
(1) forests, represented by timber and non-timber forest benefits;
(3) fossil fuels (oil, natural gas, and coal);
(4) minerals (bauxite, copper, gold, iron, lead, nickel, phosphate, silver, tin, and zinc; and
(5) agricultural land.
Total asset value is estimated by multiplying the physical amount available of the asset by its corresponding rental price. Changes in health capital are captured by extensions or reductions in life expectancy.
Doing this gives some big numbers. The US "inclusive wealth index", or IWI - its stock of wealth - is ten times its GNP. The IWI is made up predominantly from human capital. Japan is next on the list as being half as large, with human capital making up 80% of the sum and resources, nothing. Germany and China are the same size, at a third of Japan. Britain, France and Canada are very similar, but at an IWI that is 10% less. Brazil, India and Australia are also similar, and about 50% smaller.
The figure shows how the twenty countries have changed annually over the 18 years since 1990. The growth in total IWI is shown in blue, and the per capita growth rate in IWI is shown in red. Positive IWI growth rates correspond to sustainability. That is to say, countries with a positive IWI demonstrate that their productive base is not being eroded and they have maintained the asset base so as to be able to to produce similar levels of output. Countries with a negative per capita IWI imply that whilst the nation may be getting richer, the people in it are, on the whole, not doing so. The rank order is remarkable. My own impression of China is not one of sustainability. I visited Chile last year, and i was not that struck by its "sustainability". But perhaps I was mistaken. Certainly, I concur with the rank given to Russia, Saudi and Nigeria. That the US is below the UK seems strange. Take this with a pinch of salt, as you wish.
I am aware that this does not value "penguins against forests". I am not sure that this can be done in anything but an academic way. As penguins are not traded against forests, there is no market exchange rate. I therefore agree that it follows that if markets are to behave as though there were such a price - that declining forests represents a cost that is embedded in the cost structure of those depleting them - then this cannot come from such analysis. For where, then, can it come? From convention. From governments saying that it is thus and so. There can be no other approach. Unhappily, this implies a considerable arbitrariness, big chances for lobby and challenge. Maybe be that is a new kind of state that we need, one that can with this cope?
My biggest query is to do with the natural world. Our damage is considerable and there may well be some predetermined exogenous reactions from our natural systems that should be included - like an increase in extreme weather events - that are unavoidable and could have serious consequences. I have also tended to be more skeptical about demography, especially given the possible impact of new diseases or a more rapid education of women which will help to bring the birth rate down sooner than expected.
Robert Skidelski is a well-known economist. He and his son have written How Much Is Enough? Money and the Good Life (Allen Lane 2012),a book in which they question the assumption that more value added is a Good Thing in itself. They ask how we are to live well amongst plenty. I am unconvinced to their answer to this question, which is to identify a large number of "freedom from" items - disease stress, insecurity, dependency, personal trivialisation - and prefer these to a list of "freedom to" possibilities they not unreasonably point out that, natural systems aside, if we all exert out freedoms to do things we largely destroy the object of the quest. Positional goods are no longer attractive when everyone is having a beer and greasy chips, on or in them. The dainty fishing villages of Southern Spain are now the strip of concrete sleaze, with names like Torremolinos and Benidorm.
They are neither captured by views that optimise some overall measure of happiness for a given society not by environmental sackcloth. The economic engine, if properly primed, may well be able to avoid environmental catastrophe. Maximising collective happiness would be a tyranny of the collective over the individual - suppose I do not like football? Suburbia? Politicians would pay off statistical gains in one area against losses in another. The age-old utilitarian problem would not be answered: is 100 units of happiness afforded to one person the same as 1 unit given to a hundred people? Why?
They believe that whilst "we are all miserable in much the same way, each is happy in his own manner." We have no real, general wants that are not satisfied, save those imposed by biology; but rather than being happy with what we have, we rank ourselves against others and suffer by doing so. We are rendered discontent, therefore, in a systematic, professional manner from childhood, not least by advertising and the general dynamic of the market. We are concerned that our looks are not as good as film stars, that our car or house could proclaim more status. Every aspect of our lives is plastered with advertising, and corporate identity creeps like poison ivy under our window frames.
Adam Smith believed that capitalism harnessed avarice to the benefit of society, and the sin of greed was to be transformed into “rational self-interest.” The Skidelskys believe that the result has been rather that people now only serve themselves, and that society forces people to perpetualy to pursue growth and consumption, without any sense of satisfaction or satiation. One is reminded of Frederick Pohl's 1954 story, The Midas Plague, in which production was automated and society forced individuals to satisfy consumption quotas - so many golf bags to wear out by the end of the month.
We should, say the Skidelskis, aim to satisfy the basic needs of everyone, and then set up systems that tax "bads" - consumption, pollution - instead of "goods" - employment, value added. We should pursue creative leisure and not fall into the consumer traps of television and organised leisure. People allegedly are unable to think constructively about themselves outside of their work environment, and see 'leisure' as euivalent to 'slack time'. We oursue money as an abstract goal (do we?) and this is a historical aberration. We find ourselves in a situation in which “the poor work less than they want to, and the rich work more than they need to.”
My problem with this is that most people live today to standards that would have defied monarchy throughout the ages. At the beginning of the twentieth century, who could have imagined that their home help might holiday in Brazil - and even have cosmetic surgery whilst they were there, as happened to the writer last month? We may have more than we need, but we have infinitely more choice and we are hugely better educated in the exercise of that choice.
In my opinion, the true point which the Skidelskis make - but do not explicitly identify - is that much of what is wrong with consumption today is due to the pursuit of rank, of being a step ahead of the people next door. Cars get us about in comfort and safety, with reliability and efficiency as a sine qua non of the market. High status cars cost exceptional amounts of money, but are often less useful, convenient and reliable than their cheaper counterparts, and exist solely to offer preening power. Trophy houses, yachts and partners fulfil similar roles. In contrast, when asked about his own happiness Cicero replied that: "I never admire another's fortune so much that I became dissatisfied with my own."
Rank once used to define social position, from the monarch on downwards in strict order. Today, there are dozens of ways of ordering - wealth, connections, "coolness", beauty, fame, prowess, access to power, and still ethnicity and birth - and nobody can hope to climb the greasy climbing frame made up by these various poles. Victims of rank are on the whole insecure individuals, who must substitute intangible or objective possessions for self-confidence. And they are victims, for sensitivity to rank is as cruel a task master as can be imagined. Pleasure can be supported by illusion, but happiness rests upon truth.
"As iron is eaten away by rust, so the envious are consumed by their own passion."
Re: Comment 3, which led both the author and Ed. to suggest that China's pre-eminence was counter intuitive.
IWI per capita is growing rapidly because it is saving and investing furiously, building up its 'manufactured capital' (factories, roads, etc). China may be doing this in part at the expense of its 'natural capital'. (E.g. suppose it takes one forest to build one factory, and the factory has a higher price...)
If this is counter-intuitive, it is because you are placing a higher relative value on the natural capital than the Cambridge researchers, who use a market price for the forest. The Cambridge approach identifies situations where societies are eating their own seed corn (Nigeria), but it can't cope with the issue that some market prices are 'wrong' (e.g. at present we don't value the carbon-absorbing aspect of forests).
Humans now divert or prevent about a quarter of the planet's total net primary production of biomass. Half of that is represented by agriculture and fishing, 40% by diverting land to sterile use - to cities and roads, for example - and a tenth is destroyed by fires that are in one way or another caused by humans.
The figure starts from what is called net primary productivity - essentially, the amount of photosynthesis net of plant respiration that occurs across the globe. The top panel shows the percent loss due to changed land use. (Blue shades show gains, due to irrigation.) The bottom panel shows losses due to all uses - except fires, which are too episodic to plot rationally. India is plainly in an unhappy situation in this regard. Europe and the US mid-west, China and fertile Australia are living beyond their means. The rest of the world is set to "catch up".
This, from the perspective only of food, is problematic. Most of the agriculturally-useful land on the planet is already dedicated to food production, and we are losing land to other uses at an accelerating rate. Crop yields have tended to plateau, at least in aggregate, as the new land that is being brought into cultivations is increasingly marginal. However, yield growth continues on good land, and water use efficiency is increasingly based on excellent biophysical insight and appropriate technology, such as drip irrigation.
Projected change in the demand for land in 2030, millions of hectares
Lambin and Meyfroidtb www.pnas.org/cgi/doi/10.1073/pnas.1100480108
Low land availability
High land availability
|Additional biofuel crops|
|Additional grazing land|
|Expansion industrial forestry|
|Expansion of protected areas|
|Land lost to land degradation|
|Total additional land demand, 2030|
The table assesses the situation for 2030, based on a view in which land use changes rapidly, perhaps due to climate or technology change- or in which such change is somewhat slower. Feeding the world population will require an additional 2.7–4.9 million hectares (Mha, ten thousand square kilometres) of cropland per year, depending on diet, technology and wastage. Estimates for biofuel use depends on policy, but reasonable ranges have been included. Feedlot animal production modifies the otherwise major demand for pastures: up to 5 Mha per year. Industrial forestry expands by 1.9–3.6 Mha per year, replacing natural forests and encroaching on agricultural land. Reserves are predicted to expand by 0.9–2.7 Mha per year. Land degradation removes 1–2.9 Mha from availability. Cities occupy only <0.5% of the Earth's total land area, but urbanization nevertheless takes 1.6–3.3 Mha per year of agricultural land. Overall, the additional demand could be between 285 and 792 Mha, or between about three and eight million square kilometres. To put this in context, the surface area of Australia is about 7.7 million square kilometres.
The implication is that available land will "run out" - or that costs will rise sharply, as ever more exacting technologies are brought into play - in the later 2020s. Yield increases will, of course, help: if crop yields had remained constant since 1961, an additional 1.8 Mha of cropland would have been required. The chief spur to technology and productivity will be, of course, profitability, and this implies that higher food prices will be require to achieve this, both in absolute terms and in relation to other industrial sectors, such as manufacturing.
Food prices have indeed tended to increase since the turn of the millennium. The sharp price spike in 2007-08 was obscured for many by the financial crisis, but its impact on poor countries was considerable. There were major riots in at least 47 countries. In line with other commodities, food has risen by 45% since 2006, according to the IMF (2012). There are three reasons for this: first, growing demand from the emerging economies as these become richer. For example, China bought 60% of all traded soya beans in 2011. Second, increasing input costs due to other commodities, such as energy. Third, there has been a - perhaps temporary - but remarkable expansion in biofuel cultivation, which has tended to crowd out food production aimed at poor people. For example, US bioethanol used around one hundred million tonnes of grain that would otherwise have offset world starch-crop prices. Setting this up in 2007, President Bush challenged farmers to quintuple the corn going into biofuels, or around 250m tonnes. The result was directly reflected in world food prices the year after, and fuel substitutes which cost around $700 per barrel of oil equivalent.
The IMF note that the policy responses in some countries have exacerbated the problem. Major exporting countries have introduced export taxes or bans, or in other ways have restricted exports of food. Importing countries are shielding their citizens from international prices, meaning that local farmers are not stimulated into production. Food prices account for almost 70% of retail prices in developing economies, making inflation extremely sensitive to them. Even in China, food costs rose by nearly 12% last year and contributes about 1% to overall inflation.
Are these problems solvable? Technically and in a global context, they are. Plainly, food will cost more but the room for yield improvements outside of the current key areas is considerable. Water efficiency in most pre-industrial markets is typically 2-5% of potential. Plants can be bred for higher water efficiency. For example, Crassulacean acid metabolism - used only by plants that live in extreme conditions - allows them to lose water only at night, and to store carbon to be fixed within a closed system by day. This could radically alter water use by crops into which this pathway was inserted. Salt tolerance - as enjoyed by coconut palms and mangroves, for example - could in principle allow (well drained) sea water irrigation in desert areas. Natural photosynthesis uses only about 4% of incident sunlight, at peak. As we understand the baroque enzymatic system that plants use, there are already moves to redesign the system for greater efficiency, often employing the more primitive but less complex pathways from photosynthetic bacteria.
Agricultural costs can also be reduced. For example, nitrogen fertilisers take about 1.7% of global energy. It is clear that these can be replaced can be replaced by natural fixation of nitrogen from the atmosphere through root symbionts, precisely as all legumes do today. Phosphate fertiliser needs can also be lessened by symbionts that scavenge it efficiently from the soil, a trick already employed by onions. (Phosphate gets locked into insoluble Calcium phosphates, making it plentiful in most soils but unavailable to the plants that grow there.) Varieties that harvest more easily, store better and ripen predictably can also cut costs very considerably. Very often these and other farm techniques are capital intensive and increasingly costly. A major item of farm machinery can cost a million dollars. Taking into account yield increases, it takes the net income from roughly double the physical area in Britain to buy 1HP of tractor power as it did in 1950. (Labour costs have fallen by equivalent sums, however, and in general agriculture has gone all-out to substitute machinery for human labour inputs, for reasons that are not always clear and with social consequences that are considerable.)
What is less solvable are the logistic networks on which effective agriculture depends. Growing roses in Kenya is easy, but getting then dew-fresh into a European supermarket chain is an intricate dance of logistics, marketing and legal permits. Up to half of peasant agriculture produce is lost after harvest, to spoilage, rats and beetles; and the farmer realises a few percent of the value taken up the distribution chain to market. Few peasant farmers are able to "look ahead" to potential demand and to plant accordingly. Supply and demand do not speak to each other. Most famines are at least exacerbated by poor storage and transport.
This said, either biodiversity or the demand for food has to give way in margin land and in those countries with marginal farming. It is usually the wild that suffers, eroded at the margin by goats or smashed by bulldozers. Taken across the world, we had an area the size of Australia under cultivation in 1900; and we will have an area of pristine wilderness roughly the same size left in 2030.
Countries make a transition in which agriculture drops from being almost all of gross product to in the order of or less than a percent of it. This took Britain over a hundred years, and has taken many Asian countries a few decades. Employment changes in parallel, but - as noted above - it does so even more rapidly. This displaces people to the cities where, for a time, at least, they form a pool of cheap labour. Governments economically exploit the countryside in order to provide cheap food for the urban workforce. This trend then reverses when the country is rich, and governments then tend to subsidise the country in order both to placate its conservatively-mined voters and to support what the nation now sees as its "traditions".
|% GDP from agriculture (2008)|
|% reforestation by plantations (1990-2005)|
|% aai crop yield increase (1961–2007)|| |
|Protected areas (% of land area)|
|Foreign investments in land use (% of total FDI, 2006)|
The table shows the relative behaviour in four countries in which such a transition is almost complete. Viet Nam and China have gone for reforestation in a big way. China, with nearly exhausted land reserves, has been buying agricultural potential in Africa. (Whether they will be permitted to use this resource preferentially if Africa were to become even more sharply hungry is something yet to be tested.) Costa Rica is remarkable for having protected a quarter of its entire surface, and now relies heavily on eco-tourism. El Salvador was and is a country given over to cotton production, under the control of a land owning oligarchy. Its responses to broader land use issues are predicated on this. Yield increases have continued to develop smoothly, on the back of both the tecnification of production and better logistics.
It is probably true that three things need to happen if we are to feed the world easily. First, farm profits have to rise in order to make technification attractive. This will involve land consolidation and the destruction of traditional ways of life. Urban populations will have to spend more on their food.
Second, a wave of biotechnology-based innovations must be positively welcomed. It is a matter of regret that some of the most influential of the NGOs have resolutely set their face against these technologies for reasons that can only be called dogmatic, evidently specious and which have failed any number of objective tests. These notions are being fed both to consumers in the wealthy world and to governments in the poor countries. These issues are too important to be ceded to the propaganda of fanatics.
Third, the entire notion of bio-renewables needs to be re-thought. Burning food in vehicles is, ex ante, a stupid notion. Destroying forests to supposedly green ends is extremely foolish. Many such subsidies and projects are aimed primarily at the rural interest and the rural vote, rather than solid progress towards emissions management. Consider the nature of a possible serious biomass project:
Current hydrocarbon fuels have admirable energy densities and we have a century of experience in their safe management. Our vehicle fleets, maintenance infrastructure and fuel distribution systems are all set up with these fuels in mind. Alas, their reserves are limited, costly to exploit and increasing concentrated in areas of high political risk. Their combustion emits carbon dioxide. What we need are, therefore, synthetic hydrocarbons that are cost effective, renewable and which do not emit net carbon. How can this be achieved?
Let us put our project in an expanse of desert with access to the sea. The desert is irrigated from the sea, with concentrated brine returned to the sea. The crops that are grown are salt-adapted, species such as mangroves and sea rushes, probably manipulated to harvest well and thrive in the conditions that are implied by the geography. This, dried in the sun, gives us our renewable carbon.
Inland, let us place many square kilometres of solar panels. These produce power by day, which is used to electrolyse water to produce hydrogen, plus harmless oxygen that is released into the atmosphere. The hydrogen builds up in gasometers during the day, and flows through pipes to the facilities in which we are going to make out hydrocarbons. Diesel, for example, consists of paraffins of a certain range of lengths, easily synthesised from simple components using current technology; indeed, technology over a hundred years old. The dried biomass, when heated in a hydrogen stream, yields these component parts. The facility emits a very pure gasoline, diesel or whatever you want from it, at reasonable cost and utter sustainability.
Projects of this size are realisable, and it is precisely this sort of market-driven industrial heroism that is needed if humans and nature are to continue to survive alongside each other. For markets to know what to do, states need to know their own minds. Political schemes that waste immense sums to benefit this or that client group, or which arise from muddled thinking and NGO advocacy will not do.
Comment 7 is exactly why I participate in these activities. However, I have to say that I kind of resent the view that the wilderness is elective, something we can choose to do without. Aside from its cultural and aesthetic importance, we damn well rely on these structures to manage our climate, our water supply and out crops' health. They have real economic value, but although many have tried to put a figure on this, it is specious to do so. Basically, if as you say humans are taking a quarter of the planet's output, that has to be pretty close to or well beyond where we can go - dare go, should go. I don't want to use words like "sacred" because they just express what I think in vague words; but there is something there that implies a secular blasphemy if we destroy these things because we are too pig stupid to manage our reproduction rates.
The figure shows an OECD estimate, redrawn, of how diversity has fallen by biome. (A "biome" is a large scale habitat.) The drop over the last century is dramatic, the drop over the next few decades is likely to be much more so. Can't continue safely; shouldn't, can't, mustn't.
Just a simple query, really. If models of climate change show us anything credible, it is that change is going to show up as much more rain. How will that effect farming? I don't mean that crops will get lost to floods, but in general the greatest limit to farming is water, and more water must mean more food. Also, perhaps, as more of the land goes green, a certain cooling effect - more humidity, less sensible heat?
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