98-Niazi-Decoupling Growth From Resource Generation

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Brief for GSDR 2015Decoupling Growth from Resource GenerationBy Zeenat Niazi, Anshul S. Bhamra, Development Alternatives*This brief has been extracted from the paper, Decoupling Growth from Resource Consumption, 2014 writtenby Development Alternatives and Wuppertal Institute.A.IntroductionGlobal economic and social development over the lasttwo centuries has been largely achieved throughintensive, inefficient and unsustainable use of theearth’s finite resources. Over the course of the 20thcentury global resource extraction and use increasedby around a factor of 89. Global population grewaround half as fast and GDP grew at a significantlyhigher rate (by a factor of 23). Given a worldpopulation that grows by 200,000 people each dayand especially a rapidly growing global “middle class”associated with resource-intensive consumptionpatterns, the demand for natural resources willcontinue to increase. According to the GlobalFootprint Network, if current economic andproduction trends persist, we will need the equivalentof two Earths to support us by 20301.The global challenge today is to lift one billion peopleout of absolute poverty and to set the pathway formeeting the needs of nine billion people in 2050 whilekeeping climate change, biodiversity loss and healththreats within acceptable limits (“planetaryboundaries”). For present and future well-being,there is a need to achieve sustainable resourcemanagement by decoupling natural resource use andenvironmental impacts from human well-being.*The views and opinions expressed are the author’s and do notrepresent those of the Secretariat of the United Nations. Onlinepublication or dissemination does not imply endorsement by theUnited Nations. Authors’ can be reached at abhamra@devalt.org.B.i.Global Footprint Network, 2012The Dichotomy of EconomiesThe developed economy, typically represent the‘consumption society’, is exploiting a large share ofthe global natural resource base. These affluentunsustainable lifestyles are based on and areintricately interwoven with the consumption andproduction patterns of the current economicdevelopment model of the West2.On the other hand, developing economies, with largenumbers of poor living in substandard conditions, areboth agents and victims of environmentaldegradation. They represent the ‘subsistence society’with high ‘direct dependence’ on natural resourcesfor livelihoods and basic needs. A reduction in stocksof natural capital and flows of ecosystem servicesdisproportionately harms the wellbeing of the poorand the resilience of their communities. In their questfor food security and basic need provision, the pooroveruse limited resources available to them resultingin environmental degradation further reinforcing this‘downward spiral’ or ‘vicious circle’3.ii.‘Common but Differentiated Challengesof Decoupling’It is clear that a global transition in natural resourceconsumption will need an absolute decoupling indeveloped (industrialized) countries (i.e., reduction ofaggregate resource consumption) together with arelative decoupling in developing countries (i.e.,reduction of growth rates of resource consumption)until such time as the developing countries attainacceptable standards of living, after which they, too,21Decoupling: Challenges3Mont 2007IFAD 2011

will have to adopt measures to achieve absolutedecoupling. These common, but differentiatedopportunities and challenges of decoupling indeveloped and developing countries can be madeclearer by referring to Paul Ehrlich s identity39. (SeeAppendix 1)a necessary condition for sustainable development more jobs, less use of nature - can be demonstratedby the following:Only if the growth rate of GDP growth rate of LP Employment increasesOn the other hand:Only if growth rate of GDP growth rate of RP (or EP) Resource use (or energy) decreasesThus to meet the necessary condition of sustainabledevelopment the following formal inequation musthold:Growth rate of LP Growth rate of GDP Growthrate of RP (example for annual rates: 1.5% 2% 2.5%)Thus, focussing economic policies only on maximising‘economic growth’ without fostering resourceproductivity will not end up at absolute decoupling.On the other hand, the growth rate of GDP must behigh enough if additional jobs were to be created withan average growth of labour productivity. The formalinequations hold under cet.par. conditions. Toalleviate this ‘knife edge’ problem other strategicoptions like e.g. the reduction of average labour time,structural changes to a service/recycling economy,new models of wealth, lifestyle changes andsufficiency policies have to be taken into account.iv.iii.A ‘Knife-Edge’- Problem of AbsoluteDecouplingIn most countries of the North the acceptance of astrategy on absolute decoupling of GDP from the useof nature will be low if it is not connected with atleast stabilizing or increasing employment. It can bedemonstrated by a formal comparison of growthrates again that this condition – cet.par. – can beperceived as a societal ‘knife edge’- problem.Using the following definitions, Labour productivity (LP) Gross DomesticProduct (GDP) / Jobs (J) Resource productivity (RP) Gross DomesticProduct (GDP) / Total Material Requirement(TMR) Energy productivity (EP) Gross DomesticProduct (GDP) / Energy (E)The Decoupling TriangleSupporting micro-level activities that are compatiblewith long-term goals and conditions will require asystemic perspective and a way to link the micro levelof where change happens to the macro level of whereimpacts are measured, policies are made and targetsare set. It also requires knowledge on how to cushion‘rebound effects4’ over time. For example, eventhough the technical feasibility of an absolutedecoupling and a tremendous increase of resourceproductivity were demonstrated by scenarios andmight be the aim of national resource policies,counteracting social and economic reactions can ‘eatup even massive increases in product, process orsector specific resource productivities.4See for example Madlener and Alcott (2011). Here the term „rebound effect“is used in a general and pragmatic way to include e.g.direct/indirect rebound effects as well as growth, structural and quantityeffects.

It is the triangle of efficiency (“more with less“),sufficiency (“less can be more“) and consistency(“better than more“) on which policies and measuresfor decoupling should be based.At the end of the day, what counts from an ecologicaland ethical perspective is to sustain ecosystemservices for all peoples and generations to come43.Equity and Decouplingv.There is a global consensus on using decoupling asone of the strategic approaches towards a moregreen and sustainable economy. Inequity matters forboth instrumental as well normative reasons such asfairness and meritocracy5. The three principles ofequity, in order of priority, are6: Equal life chances: The circumstances andconditions of an individual (those not under his/hercontrol like gender, ethnicity and fathers/mothers jobetc) should not have an effect on the outcome (suchas health, educational attainment and availability ofopportunities etc). Equal concern for people’s needs: Basicnecessities (such as food, shelter, water andsanitation etc) distributed according to the level ofneed. Meritocracy: Rewards and benefits aredistributed as per an individual’s ability based on thenotion of fair competition.We need to look beyond the current focus on (a)protection and compensation (b) attaining co-benefitsand helping in adaptations and include (c) anchoringthe structural transformations needed by looking atrights and regulations etc48.C.Essential AdjunctsStrategy in Decouplingasagained through new alliances of fast-movers workingtogether to demonstrate desirable alternatives tobusiness-as-usual7.i.New types of knowledge are needed tounderstand, foster, manage and improve thistransition. Targets for decoupling resource use basedon scientific knowledge in the light of risk anduncertainty are necessary. Participatory processes areessential in the production and usage of scientificknowledge.ii.Capacity in skills and innovation are requiredin both developed and developing countries.Investment in awareness raising and skillsdevelopment is an important precondition forpromoting resource efficiency in companies. To thisend, the structure of universities with rigiddisciplinary orientation and institutional inertia needsto be revisited to equip the next generation ofscholars, entrepreneurs and employees to handlechallenges of the future.iii.Policy needs to play a dual role for promotingdecoupling. Policies need to build the framework andset an overall direction for change. This includesstating clear and binding targets for resource use andemissions (related to planetary boundaries) andcreating a level playing field for eco-innovators byrecognising both economic and environmental costsand benefits of their activities. Secondly, policiesprovide support for eco-innovation through science,innovation and enterprise, as well as through greenpublic procurement and public-private partnerships.CoreDecoupling will require changes across strategicadjuncts like knowledge, capacity, policy, technologyand finance. It will require structural changes inbusiness models, lifestyles and modes of governanceand will primarily rely on a combination of changes56Cobham and Sumner, 2013Jones, H., 20097EIO 2013

innovations’ aim to bring products back to a level ofbasic simplicity and are designed to be inexpensive,robust and easy to use.vi.Finance and finance structures are key toproviding the means for investing in a sustainabletransition. New approaches urgently need to bringtogether technical and financial experts in order todevelop and implement business models andinnovative financing schemes. A key question forfurther research is how to finance innovations withlong-term paybacks, when profits for the companyare needed over the short term.vii.Structural and behavioural changes in howbusiness and governments are run especially in richcountries are key to meeting future demands inability in value creation and distribution ofcurrent businesses rather than as an externality isrequired. Similarly, changes in the organisation ofgovernment may be necessary along with strongleadership and overarching targets. Lifestyle changesparticularly in rich countries are needed to createdemand for new and green innovations to pave wayfor the political willpower needed to instigatestructural change.iv.Technologies are expected to play a role inthe shift to a resource efficient economy and thecorresponding restructuring of industrial processesneeded to modernise industry and fostercompetitiveness. Key enabling technologies exist inthe areas of biotechnology, advanced materials,nanotechnology, photonics and micro and nanoelectronics.v.The pursuit of resource efficiency not onlyleads to high-tech but also to low-tech and affordablesolutions for customers in emerging markets. Morecreative ways of approaching functionality, changedconsumption behaviours and social innovation areessential to any systemic change. These ‘frugalviii.A variety of studies have identified thetransformation of today s linear ‘take-make-dispose’patterns towards a circular economy as one of themost promising strategies for a successful decouplingof resource consumption and economic growth57.From a resource point of view the optimal approach isto prevent waste generation in the first place. Thecircular economy approach not only significantlydecreases demand for natural resources, but alsooffers massive opportunities for new green businessmodels.

AppendixesAppendix 1- Paul Ehrlich s identityThe formula40 I P x A x T (I Environmental Impact;P Population; A Affluence per capita; T Technology)can be interpreted as follows: Taking resource use(R)41an the indicator for I, Y/P (per capita income) asthe indicator for ‘affluence ’and T as the indicator ity) then the relation R P x Y/P x R/Y(reformulated in growth rates (wR wP wY/P wR/Y))leads to a simple conclusion: With a positivegrowth rate of population (wP) and for per capitaaffluence (wY/P) the global environmental impact canonly be constant (wR 0) if the resource intensitydecreases by the added growth rates (wP) (wY/P).The strategic message on a global scale is quite clear:The resource shortages and environmental impacts ofresource use can become significant constraints onhuman progress unless we urgently find ways toreduce the growth of population (P), accept lowerstandards of living (Y) and/or significantly raiseresource productivity.But this global perspective has to be differentiated atleast according to development stages: Concerningthe global environmental impact (I) differentiated fordeveloped and developing economies. IIC can be absolutely reduced in developedcountries (IC; assuming constant population) if thegrowth rate of resource productivity is higher thanthe increase rate of per capita affluence IDC can be relatively reduced in developingcountries (DC; assuming growing population and highGDP-growth) if the growth rate of resourceproductivity is as high as possible to offset thenecessary increase of per capita affluence.

Appendix 2- Good Practice Case Studies fromIndiaThere has been sporadic evidence of decoupling inthe Indian context. The following three case studieshighlight the approach followed and how theycontribute to the core principles of PATORY GOVERNANCEDeveloping economies are particularly sensitive tosurface water impacts of climate change andsubsequent overuse of ground water because theireconomies and society are heavily dependent onagriculture. For e.g. ground water overdraft rate innorthwest India is 56%8. Hiware Bazar in Maharashtrais a semiarid villagethat from1970s to1990s ranoutofmost of itsnaturalassets.The villagefaced anacutewatercrisis as a result of which during 1989-90, only 12% ofthe land was cultivated resulting in rampant povertyin the region. Like many other places in India, HiwareBazar was in a classic overshoot and decline modewith the potential risk only becoming clear whenwells ran dry. Water retention is limited due to poorpermeability of the geological structures, andaccentuated by degradation of forests and greencover over the years. The available water is poorlymanaged and access to water is determined by landand the capital to dig deeper and deeper wells. As aresult large parts of the region are categorized asover-exploited, critical or semi-critical in terms ofgroundwater availability. Acute water shortages dueto vegetation loss were undermining agriculturalproductivity.The village community however managed to turn theface of the village around in a matter of 5 years from8Briscoe 20081995-2000. Agricultural production potential hasincreased by several orders of magnitude andcontributed to reducing poverty by 73% in less than adecade9. An average villager earns almost double ofmost of India’s rural population, with an averageincome increase of 20 times over creating 54millionaires (Hiware Bazaar e-panchayat). Unlikeother villages that desperately wait for governmentsupplied tanker water to meet their drinking needs,Hiware Bazar today has assured drinking water. Thenumber of wells has increased from 97 to 217. Landunder irrigation has increased from 120 Ha in 1999 to260 Ha in 2006 (Hiware Bazaar e- Panchayat). Theyhave also managed to plant a rabi crop, albeit overreduced acreage. Watershed development and strictobservance of rules that preserve the water tablehave been central to this village’s remarkableeconomic transformation10.A fundamental premise of the program was theadoption of participatory planning processes. Itencouraged villagers to treat as a communityresource, and empowered them to prioritize uses ofavailable water. To institutionalise sharing of water,the village introduced a practice of water budgeting.Using ‘water bank’ principle, the budget ensures thatthe village does not draw more water than it stores ina year, and a small amount is kept in reserve.Depending on rainfall in that year, available water isallocated amongst various uses, with first priority fordrinking water for humans at 50 litres per capita perday (lpcd)11. Of the remaining water, 70% is reservedfor irrigation and 30% is stored for future use byallowing it to percolate and recharge groundwater12.The irrigation was mainly carried out through energyand water efficient technologies of drip irrigation,open irrigation and with minimum use of groundwater. Bhattarai et al.(2008) estimated that waterefficient irrigation investment projects in India foundeconomic multipliers of as much as three times. Suchinitiatives that deliver associated multiplier effects area key part of the decoupling process.Furthermore the village specially targeted ecologicalregeneration and also took advantage of the existingEmployment Guarantee Scheme to regenerate9TEEB 2012IDFC 201211ibid12The Nature of Cities 201310

degraded village forests and catchments and torestore watershed ecosystem. The villagers resortedto various watershed conservation techniques likecontour trenching and bunding, tree plantation,rainwater harvesting, recharge of ground waters. Thesubsequent regeneration of degraded forests andbuilding of earth embankments around hills have alsohelped to conserve rainwater and rechargegroundwater.Hiware Bazar imposed grazing restrictions on limitedareas at a time viz. on a rotational basis, duringreforestation. Bans were implemented in a staggeredmanner. For instance, a sudden and complete ban onopen grazing would have an adverse impact onlandless that rely on common pastures. Afterreforestation was complete, households could collectone head load of grass a day from common lands (cutby sickle to preserve the roots) for Rs. 100 per year13.This fee is waived for poor/landless families. Similarly,the tree-cutting ban was imposed incrementallybeginning with forest land then moving to otherareas. Babul trees were initially exempt to provide asource of firewood.The success of Hiware Bazar rests on changingmindsets and participatory governance. It allowed thevillagers to debate and prioritize their developmentgoals, and manage their common resources such aswater in an equitable and sustainable manner.Replication efforts for such large scale programs needconvergence of development objectives, public andprivate funds and ardent involvement of multipleactors like government, beneficiaries and NGOs (astechnical support). The keystone however is stronglocal leadership that creates the community drive andmotivation.CONSTRUCTING CHANGE WITH GREEN BUILDINGSThe scale of urban expansion in India is and willcontinue to be enormous, driven by economic andpopulation growth. In 2011–2012, India’s constructionsector accounted for 8.2% of the country’s GDP,employing 41 million people, and is poised to becomethe world’s third-largest construction sector by 2018.Over the next ten years, the sector is expected togrow by 16-17%.The construction and use ofbuildings, driven by rapid urban expansion, is likely toimpose tremendous pressures on the naturalenvironment.The construction sector has a large and growingresource footprint. It accounts for 30% of electricityconsumption in India, growing at 8% a year and 23.6%of the national greenhouse gas (GHG) emissions14.Materials and equipment generally account for nearlytwo-thirds of total construction costs. Cementproduction is expected to increase from 228.3 Mt in2010–2011 to 600 Mt by 2020. Despite a fall in theemission intensity of the cement industry, in 2007 itgenerated 129.9 Mt CO2. Some 200 billion bricks areproduced each year, generating emissions of 41.6 MtCO2. It is estimated that 45% of India’s steel output,85% of paint, and 65%–70% of glass are used in theconstruction industry. The increased demand formaterials and the consequent pressures on naturalresources result in increasing material scarcity andescalating costs of construction.According to the Bureau of Energy Efficiency, twothirds of India’s building stock that will be required by2030 has yet to be built. Today’s infrastructureinvestments will play a critical role in determiningfuture resource intensity and affect India’s ability todecouple resource consumption from economicgrowth.Urbanisation in India is less advanced than in manyother countries, which presents an opportunity toavoid being locked into energy- and resourceintensive infrastructure. There is considerablepotential for the further promotion of green buildingsto reduce the environmental impact of constructionand urbanisation in India.The footprint of buildings certified by the IndianGreen Building Council (IGBC) is currently over 1130million m2. The market for green buildings in India isprojected to grow three-fold between 2011 and 2014,reaching 30 billion. With proven and commerciallyavailable technologies, energy consumption in newand existing buildings can be cut by an estimated 30%to 80%, with potential net profit during the building’slifespan15. Buildings compliant with India’s EnergyConservation Building Code (ECBC) are estimated tobe 20% to 30% more efficient than conventional1413IDFC 201215Parikh et al. 2009UNEP SBCI 2007

buildings (Parikh, 2011). Besides energy efficiency,using recycled building materials saves between 12%and 40% of the total energy used during materialsproduction, depending on the material16. Buildingdesign can maximise natural lighting and ventilation,which reduces energy needs and improves the qualityof indoor air. These measures have a noticeableimpact on the operating costs and result in savingsover the building’s lifetime.The Development Alternatives Head Quarters in NewDelhi is an example of how construction can bedecoupled from resource use, such as energy,through material efficiency. Aiming at zero emissions,it is described as a living ecosystem: a fine balancebetween both natural and man-made processes usingenvironment-friendly energy, resource and energyefficient building materials and water managementmethods for conservation of water. Its constructionhas involved a wide range of resource-savingstrategies, ranging from the use of eco-materials andnatural lighting to rainwater harvesting and water andmaterial recycling. A key factor of success was thePeople Driven Design approach, wherein the designevolved over an interactive process between the DAstaff and the architects and is sensitive torequirement of universal access. The buildingreaffirms a commitment to People and Nature. It uses30% less embodied energy through the highlyefficient use of low energy natural materials basedbuilding elements like mud and fly ash blocks insteadof burnt brick or concrete timber for doors andwindows. 90% materials sourced from around Delhi;thus involving minimum transportation. The stoneflooring pattern designed to reduce waste to less than5%. 30% less steel and cement is used owing to theuse of innovative technologies like Ferro-cementchannels with minimal steel bars and chicken-wiremesh, Shallow domes with Fly Ash blocks requiring nosteel reinforcement and Short-span reinforcedcement concrete frame for basic structure40% less operational energy is consumed via useracceptance of indoor temperature range from 180 to280 Celsius. The orientation is optimised to maximisenatural lighting and ventilation and minimise heatgain. “Green clothing” (planting on building façade),cavity walling and built-in shading devices minimiseheat gain. An innovative “Hybrid” air conditioningsystem minimises use of energy and water prioritisingevaporative cooling for hot and dry months and issupplemented by (CFC free) refrigerant cooling forhot and humid months.The use of low-cost, local and low-embodied energymaterials remains important for sustainableconstruction, and can support local economicdevelopment while also reducing environmentalimpacts17. In order to replicate and scale up suchinitiatives it is important to create an ecosystemwhere eco-friendly materials, technology andexpertise are available and accessible to all.ENERGY EFFICIENT TRANSPORTATIONDelhi ranked 3rd in a World Health Organization(WHO) survey of the most polluted cities in ting to the presence of natural dust, thetransport sector is one of the major contributorstowards the rising ambient air pollution levels andgreenhouse gas emissions (13% of nationalemissions). Over the last three decades, Delhi hasseen an unprecedented growth in the number ofpersonalised vehicles. Delhi has more vehicles thanMumbai, Chennai and Kolkata with more than 90% ofthe vehicles being personal. The total number ofvehicles registered in Delhi in 2011 is equal to thecombined registrations done in Mumbai, Hyderabadand Chennai18. Arecent trend observed, is that of theincreasing consumption of both major auto fuels i.e.petrol and diesel. The contribution from the vehicularsector increased from 23% in the year 1970/71 to asmuch as 72% by the year 200119.The government has undertaken many initiatives tointroduce energy efficient transportation measures inthe city. The main source of vehicular pollution is thefuel itself. Initially, policies were introduced bynational and state governments based on vehicle andfuel efficiency, such as phasing out older vehicles andmaking compressed natural gas (CNG) a mandatoryfuel in public transportation. In order to counter the17UN Habitat 2011Times of India 2012; 126/india/35366083 1 vehicles-chennai-metro-bangalore19DPCC n.d.1816ibid

increasing air pollution load and carbon emissions inDelhi, the Supreme Court passed the orders to moveall the public transport on CNG by March 31, 2001.CNG (117 pounds of CO2 emitted per million Btu ofenergy) is less carbon intensive than petrol/ dieselbased fuels (157 / 161 pounds of CO2 emitted permillion Btu of energy), leading to fewer emissions forthe same amount of fuel spent.around 1000 CNG vehicles in April 1998, by 2003,there were 70,249 vehicles including taxis, autorickshaws and 9000 buses plying exclusively on CNG.CNG is also the cheapest of auto-fuels, as per theprevailing prices in May 2003, CNG comparesfavourably with diesel and petrol. However, use ofclean fuels by the public transport system is only apart of the solution.Some fiscal measures were put in operation formaking conversion to CNG a financially feasible optionfor all stakeholders. Following the Court’s order ofApril 5, 2005, for the first time in the country, penaltywas imposed on the basis of polluter pays principle,on diesel buses for violating the Court order and notmoving to CNG. This penalty has generated a hugecorpus of Rs 30 crore that is today available to theDelhi government to fund other emissions controlmeasures in the city20. Incentives like Sales-Taxexemption and interest subsidy on loans to the autorickshaw owners also helped. This experimentdemonstrates how it is possible to develop fiscalinstruments for improvement of transport andtechnology to control emissions. This has been apioneering effort and should build on to developfuture fiscal policies in the city.More recently, policies are focused on improvingpublic transportation infrastructure, with the city’snew metro as the flagship project. The first twophases were completed on 2006 and 2011respectively, with Phase III and IV to be completed by2021. Approximately, for 15 lakh passengers travellingin the Metro, 1.5 lakh vehicles are off the road22. Ithas also used flyash bricks in construction activitywhich, the corporation says, will save 3.9 milliontonnes of carbon dioxide in 10 years (ibid).The co-ordinated measures for affecting theswitchover were put in place by the Government ofDelhi through multipronged action as differentagencies were responsible for ensuring theenvironment friendliness of public transportation. TheGovernment of Delhi explored all possibilities forusing CNG, by holding discussions with vehiclemanufacturers and other public transport agencies.Vehicle manufacturers were asked to bring CNGtechnology into the country. The Gas Authority ofIndia Ltd. was requested to lay underground pipelinesfor setting up of new CNG stations. A phase out planwas put into place to ease the switchover.A CPCB study shows that there has been a significantreduction in pollution at traffic intersections and inindustrial areas in terms of CO, NO2, lead, SO2, andsuspended particulate matter21. While there wereIt is the first metro rail and rail based system in theworld that received carbon credits under the UnitedNations Framework Climate Change Convention CleanDevelopment Mechanism. Under the regenerativebraking process, whenever trains on the Metronetwork apply brakes, three phase-traction motorsinstalled on these trains act as generators to produceelectrical energy which goes back into the over headelectricity (OHE) lines. The regenerated electricalenergy supplied back to the OHE is used by otheraccelerating trains on the same service line, thussaving overall energy in the system as about 30% ofelectricity requirement is reduced23. It led to aprevention of nearly 90,000 tonnes of CO2 from 2004to 2007 with an additional 39,000 tonnes saved in2008 (ibid). Every passenger who chooses to useMetro instead of car/bus contributes in reduction inemissions to the extent of approximately 100 gm ofcarbon dioxide for every trip of 10 km and therefore,becomes party to the reduction in global warming(ibid). Over a two year period from 2008 to 2009, theDelhi Metro Rail Corporation earned nearly 4.8 croresINR through the sale of 1,64,000 certified emission2220CPCB 200321The Hindu--Delhi, "Marked Drop in Pollution Levels," 02/14/00Times of India 2011, 119/delhi/28363503 1 ca

Growth rate of LP Growth rate of GDP Growth rate of RP (example for annual rates: 1.5% 2% 2.5%) Thus, focussing economic policies only on maximising 'economic growth' without fostering resource productivity will not end up at absolute decoupling. On the other hand, the growth rate of GDP must be

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