Jennie Schmidt: The Costs of GMO Labeling

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Jennie Schmidt is the proprietor of TheFoodieFarmer “Blogging about how your food gets from field to fork”. Jennie is very different from your typical Whole Foods customer, who has never set foot on a farm – she knows farming in depth. In particular she understands the supply chain – which is why she is especially qualified to write the captioned essay on what “right to know” really costs. This is the real deal, carefully researched, first-hand explanations of what is involved in establishing traceability of every ingredient that goes into food on your supermarket shelf. Read Jennie for the particulars. She closes with this summary:

Those who say GMO labeling won’t add to the consumer’s grocery bill need to go back to Economics 101 and some basic high school math.

True traceability in our food supply system will be hugely expensive.

Its likely that as a nation, we’d never capitalize all that infrastructure to achieve true traceability.

Which goes to the crux of the matter – this isn’t about labeling, as I cited in my last GMO blog, labeling is a means to an end. As noted by many activist groups, the ulterior motive behind labeling is not about a consumer’s right to know, it is about banning the technology.

Say NO to mandatory GMO labeling. Stand for science.

I liked Jennie’s essay so much that I posted the following comment:

Jennie – thanks heaps for taking the time to document some of the true costs that the “right to know” lobby wants to impose on consumers. I’m happy to see you already have a well-deserved pat on the back from Prof. Kevin Folta.

When we see such a “movement” promoting regulations that don’t make sense – that’s a good time to ask “who benefits?” If we follow the incentives we find there are a number of special-interests who are funding this campaign. David Tribe framed the smelly bedfellows as Big Quacka and Big Organic.

A concept from Public Choice economics that helps us understand how these hidden interests operate is called “Bootleggers and Baptists”. In your GMO labeling case the Bootleggers include Whole Foods and trial lawyers. Back in the CA Prop 37 fight I wrote a few posts on this concept, such as How California’s GMO Labeling Law Could Limit Your Food Choices and Hurt the Poor and Scott Andes: Why California’s GMO Labeling Proposition Should be Defeated.

The key idea is that the Bootleggers have learned that the best media reception is obtained by fronting the Baptists, preferably worried-looking moms holding their beautiful babies.

The Bottom Line: if you want to know about food and farming – talk to farmers, not to Greenpeace.

Enviros and climate scientists continue their fight over nuclear power

It didn’t take long for the Bootleggers to organize a roomful of Baptists to respond to the open letter from four climate scientists Caldeira, Emanuel, Hansen and Wigley. The response was signed by 300 of the usual crowd including Greenpeace USA and the Environmental Working Group. John Upton at Grist asked the climate scientists for a response. Ken Caldeira replied with this very civil email:

It is time for people to rethink their positions on nuclear power, and make arguments based on facts rather than prejudices.

Any good scientist and any good citizen should be constantly re-examining their positions, so the basic call for us to rethink our position on nuclear power is most welcome. I hope that the signers of this Civil Society Institute letter can bring themselves to re-examine the nuclear power issue with the same objectivity and lack-of-bias that they seek from us.

The letter confusedly suggests that I “embrace nuclear power”, and implies that I somehow discount the importance and potential of solar, wind, and efficiency. I cannot speak on behalf of my colleagues, but at least in my case, these claims are far from the truth.

We embrace things that we love. I don’t love nuclear power. Nuclear power has brought us Chernobyl and Fukushima. If the current industry were scaled up enough to solve the climate problem, there would be one such accident each year — and that is clearly unacceptable. Were I king of the world, I would decree that solar, wind, and efficiency would be the primary means we deploy to solve the climate problem.

But there is no energy storage system that works at the scale of the modern megalopolis. We need a way to power civilization when the sun is not shining and when the wind is not blowing. In a modern real economy, not ruled by benevolent kings, reliable power is required at competitive prices. There are very few technologies that can provide this reliable baseload power. Fossil fuels and nuclear power are the two leading candidates. I think an objective assessment of the facts shows that fossil fuels are far more dangerous than even today’s nuclear power.

But I do not defend today’s nuclear power industry. Even though most nuclear power plants have an excellent safety record, there are an important few that do not. There is no justification for the claim that this important type of electricity generation can never be made sufficiently safe and inexpensive.

To say that an entire category of technology can never be sufficiently improved is, I think, to adopt a position of technological myopia, where one lacks to the capacity to imagine that future technologies can differ substantially from today’s technologies.

I do not embrace nuclear power. There is no power source that one wants to embrace. They all have negative consequences. I do not want a solar PV factory, a massive wind turbine, or a nuclear power plant in my back yard. But I want the juice. The question is not about what power source I embrace, but about what power source I might think myself capable of not rejecting. Many people want to reject power sources, but want the juice that comes from those power sources.

In summary, I applaud the signers of the Civil Society Institute letter for their concern regarding climate change and for their support of solar, wind, and efficiency. Their call for us to rethink our positions on nuclear power is most welcome, and I ask only that they rethink their position with respect to nuclear power with the same degree of receptivity and objectivity that they ask of us.

I would like to add one point: There is no perfect energy source. What motivated Caldeira, Emanuel, Hansen and Wigley to propose that the environmental community reevaluate their position is because opposition to nuclear is support for coal. Nuclear power is the only scalable, dispatchable, low-carbon energy source that is economically acceptable to China, India and the rest of the fast-developing world. And per terrawatt-hour of delivered energy, nuclear electricity has proven to be one of the safest sources: slightly better or slightly worse than onshore wind, depending on which study you read. There is no perfect energy source.

‘To Those Influencing Environmental Policy But Opposed to Nuclear Power’

James Hansen, arguably America’s most famous climate scientist, has been a forceful advocate for nuclear power, including fast reactors such as the IFR that convert nuclear “waste” into zero carbon electricity: James Hansen on Kool-Aid, the Easter Bunny and the Tooth Fairy.

(…) people who accept the reality of climate change are not proposing actions that would work. This is important, because as Mother Nature makes climate change more obvious, we need to be moving in directions within a framework that will minimize the impacts and provide young people a fighting chance of stabilizing the situation.

The Easter Bunny and Tooth Fairy

The insightful cynic will note: “Now I understand all the fossil fuel ads with windmills and solar panels – fossil fuel moguls know that renewables are no threat to the fossil fuel business.” The tragedy is that many environmentalists line up on the side of the fossil fuel industry, advocating renewables as if they, plus energy efficiency, would solve the global climate change matter.

On 3 November Dr. Hansen and three other top climate scientists joined together in an open letter directed at the Baptists in the “Bootleggers and Baptists” coalition that have made it impossible to make any real progress decarbonizing the global economy. Some examples of the Baptists are Greenpeace, Friends of the Earth (FOE), and National Resources Defense Council (NRDC). We expect Bootleggers such as Peabody Energy to promote coal powered electricity. The tricky part is that the Bootleggers support the Baptists – who claim to be concerned about the environment. At the same time they contradict themselves by blocking every effort to deploy the one energy option that can scale affordably to achieve a zero carbon economy. If it isn’t affordable, reliable clean energy, then China, India et al are not going to stop building coal plants.

Based upon what I have read in recent weeks, the November 3rd open letter has had more impact than the individual scientist’s efforts. The letter has launched a long-avoided conversation about the critical importance of nuclear in the zero carbon energy mix. Regular Seekerblog readers will be familiar with signatory scientists Caldeira, Emanuel, Hansen and Wigley. Here’s the full text of their letter:

To those influencing environmental policy but opposed to nuclear power:

As climate and energy scientists concerned with global climate change, we are writing to urge you to advocate the development and deployment of safer nuclear energy systems. We appreciate your organization’s concern about global warming, and your advocacy of renewable energy. But continued opposition to nuclear power threatens humanity’s ability to avoid dangerous climate change.

We call on your organization to support the development and deployment of safer nuclear power systems as a practical means of addressing the climate change problem. Global demand for energy is growing rapidly and must continue to grow to provide the needs of developing economies. At the same time, the need to sharply reduce greenhouse gas emissions is becoming ever clearer. We can only increase energy supply while simultaneously reducing greenhouse gas emissions if new power plants turn away from using the atmosphere as a waste dump.

Renewables like wind and solar and biomass will certainly play roles in a future energy economy, but those energy sources cannot scale up fast enough to deliver cheap and reliable power at the scale the global economy requires. While it may be theoretically possible to stabilize the climate without nuclear power, in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear power

We understand that today’s nuclear plants are far from perfect. Fortunately, passive safety systems and other advances can make new plants much safer. And modern nuclear technology can reduce proliferation risks and solve the waste disposal problem by burning current waste and using fuel more efficiently. Innovation and economies of scale can make new power plants even cheaper than existing plants. Regardless of these advantages, nuclear needs to be encouraged based on its societal benefits.

Quantitative analyses show that the risks associated with the expanded use of nuclear energy are orders of magnitude smaller than the risks associated with fossil fuels. No energy system is without downsides. We ask only that energy system decisions be based on facts, and not on emotions and biases that do not apply to 21st century nuclear technology.

While there will be no single technological silver bullet, the time has come for those who take the threat of global warming seriously to embrace the development and deployment of safer nuclear power systems as one among several technologies that will be essential to any credible effort to develop an energy system that does not rely on using the atmosphere as a waste dump.

With the planet warming and carbon dioxide emissions rising faster than ever, we cannot afford to turn away from any technology that has the potential to displace a large fraction of our carbon emissions. Much has changed since the 1970s. The time has come for a fresh approach to nuclear power in the 21st century.

We ask you and your organization to demonstrate its real concern about risks from climate damage by calling for the development and deployment of advanced nuclear energy.

Sincerely,

Dr. Ken Caldeira, Senior Scientist, Department of Global Ecology, Carnegie Institution

Dr. Kerry Emanuel, Atmospheric Scientist, Massachusetts Institute of Technology

Dr. James Hansen, Climate Scientist, Columbia University Earth Institute

Dr. Tom Wigley, Climate Scientist, University of East Anglia and the National Center for Atmospheric Research

What does this mean for citizens? China, India, Brazil et al are focused on economic growth, and hence on expanding their energy supplies as rapidly as they can. That means cheap energy. “Cheaper than Coal” is the only energy policy path that doesn’t lead to massive emissions increases.

Nuclear is the only option that can deliver Cheaper than Coal at scale. And nuclear can compete sooner and more successfully if the technology leaders such as UK, America, France and Sweden help China et al to deploy mass manufactured nuclear power. But sadly, the anti-nuclear campaigns of the Baptists have been so successful that there is no hope of holding the line at 2°C. Almost all of the nuclear plants that could have been built have been replaced with coal [*]. 

Some of the more informed discussion of the scientists’ open letter has been at Andrew Revkin’s Dot Earth.

[*] Today in a few specific markets, such as America, many methane (gas) plants are being deployed. Burning methane initially produces 50% of the CO2 per MW that coal generates, but any methane that leaks is 20 times as bad for warming. And those plants won’t be destroyed until they have lived out their lives – which means 40+ years that could have been zero-carbon power.

Scott Andes: Why California’s GMO Labeling Proposition Should be Defeated

I was planing to write an article on California Proposition 37. Now I don’t need to, because Scott Andes has done the job nicely with his essay at ITIF’s Innovation Files.

To frame the discussion we need prof. Kevin Folta’s tabulation of the available methods for altering the DNA of a plant. I recommend that you read Kevin’s article before continuing. Click the image for the full-size table:

Here are the ways that plants are genetically altered.  Note that all of them are acceptable to most people, despite having no idea what the heck is being changed, and the huge number of genes affected. 

Scott Andes explains that the activists promoting GMO labeling have no scientific basis – this is nothing like Trans-fat labeling. This is about politics. As David Tribe put it, this is about the financial interests of “Big Quacka and Big Organic“. And let us not forget the Trial Lawyers, which I discussed here: California proposition 37: Trial Lawyers, Bootleggers and Baptists

Here’s selected snippets from Scott Andes’ essay: 

This November, California voters will be asked to decide whether food that has been ‘genetically modified (GM)’ should come with a special GM label.  Proponents of proposition 37, or the ‘Right to Know’ initiative, argue that ‘in a democratic, free-market society, consumers get to make informed choices about what we eat and feed our families,’ i.e., a GM label will help consumers make informed choices. Sounds simple enough. What could possibly be the downside to a small label that presumably enables greater consumer decision making?

First, labels such as this are never about education and open consumer choice, but about limiting people’s interest in/exposure to? a harmful substance. Labels are one of many public policies that aim to ‘nudge’ consumer behavior away from a product. As Richard Thaler and Cass Sunstein outline in their well-known book Nudge, consumers are fickle, uncertain, and look for cues to make decisions. Thaler and Sunstein use the example of putting fruit first in cafeteria lines. Because people irrationally fill up their trays with things at the beginning of cafeteria lines, one way to ‘nudge’ people to eat healthy is to put healthy food first. Mandatory labels do the same thing. Cigarette labels do not exist to inform people that smoking leads to lung cancer—everyone knows that—they exist to nudge a consumer to think twice before purchasing a pack. The same thing goes for other mandatory labels such as Trans fat.

The question becomes, what makes an ingredient or food processing method warrant a label?  Obviously, there are many examples of products that are sold without detailed consumer information. Take generic brands. Beyond knowing a product is ‘canned tuna’ or ‘diced tomatoes’ consumers know little about the producing company or their method of production, yet we readily allow such products because they are cheaper and we are ensured that generics undergo the same health and safety requirements as name brands. Additional identifiers on generic goods add nothing  to informed decision making so we do not require them. Therefore, arguing, ‘consumers have a right to know,’ implies there is something about GMOs that make them more like Trans-fat than generic canned tuna. So what is the distinction?

The regulatory litmus test for mandatory labeling in the United States is the health impact of an ingredient. Nutritional content labeling helps consumers evaluate, for example, the number of calories and vitamins in a product while more explicit labels help consumers avoid unhealthy ingredients. Labels containing such useful, accurate information are required by law. Under the current regulatory framework, in order to justify a GMO label, GMOs would need to have different health or nutrition implications for humans than that of conventionally grown food.

While there are many ethical debates surrounding GMOs, one corner of the debate that science rightfully owns is whether or not GMOs have a unique health portfolio. The evidence clearly shows they do not. According to the Mayo Clinic, ‘A recent study examined the past 50 years’ worth of scientific articles about the nutrient content of organic and conventional foods. The researchers concluded that organically and conventionally produced foodstuffs are comparable in their nutrient content.’ The WHO states, ‘GM foods currently available on the international market have passed risk assessments and are not likely to present risks for human health. In addition, no effects on human health have been shown as a result of the consumption of such foods by the general population in the countries where they have been approved.’ And in a literature review for congress, the GAO writes, ‘To date, GM foods have proven to be no different from their conventional counterparts with respect to nutrients, allergens, or toxicity.’

If GMOs do not differ from conventional foods in terms of nutrition then why the call for a label? In part it’s because of a public misunderstanding that genetic engineering is creating unprecedented and novel organisms. As my colleague Val Giddings has noted, genetic manipulation is commonplace throughout the food system by conventional and organic farmers. What separates traditional transgenic methods  from genetic engineering is the use of recombinant DNA (rDNA) technology—a laboratory method of coordinating genetic material from multiple sources—to  confer beneficial traits to an organism. rDNA technologies are unique in that scientists can target one specific gene and monitor its impact on an organism, unlike traditional hybridization that blends two organisms in a completely unpredictable and largely uncontrollable grab-bag process.

The vastpreponderance of scientists agree that using GE rDNA techniques actually reduces the risk of surprises or undesirable results compared to traditional methods because through rDNA  one can actually see the genetic effects of a foreign gene, while traditional methods are only able to observe the phenotype implications (what a plant looks like). (…)

(…) Marchant, Cardineau, and Redick show in their book on GMO labeling that when the predicted cost of labeling is included in the questions, consumers overwhelmingly reject mandatory labels. More importantly, the reason so many consumers support labeling is because  believe GMOs are harmful. Responsible public policy should not promote this misconception but try to correct it. When cigarette labels were first debated most consumers believed they were unnecessary because people did not understand the health consequences of smoking.  Science was further along than public opinion. Similarly, with GMOs, science is ahead of public opinion.

{snip snip}

Definitely read the whole thing. Also be sure to read Hank Campbell The Mercenary Intent Behind Proposition 37’s GM Food Labeling

Why revenue-neutral carbon taxes are superior to "cap and trade" schemes

To stabilize carbon emissions we need to choose effective policies to incent investors and consumers to make low-carbon choices immediately — not twenty years in the future. The most critical investment decisions are those of the power generation utilities — who are rapidly constructing inexpensive coal-fired plants around the world. To stop that impending train wreck the electric utility boards of directors need certainty of the future costs of carbon emissions. I.e., we need to establish a “price on carbon” that produces immediate results.

Fortunately, the requirements for efficient taxation and regulatory policies have been thoroughly studied — we do not need to create new “Bi-partisan Commissions” to recommend structural options. The following summarizes some of the relevant research demonstrating that a revenue-neutral carbon tax scheme is far superior to the politically popular “cap and trade” schemes such as Kyoto or the European “Emissions Trading Scheme” (ETS).

A revenue-neutral carbon tax scheme can be implemented with nearly zero administrative cost — existing tax collection and auditing channels are almost all that is required to implement a new tax schedule. The price mechanism allows each investor to confidently plan for her future cost of emissions. The carbon tax option gives us certainty of future costs, transparency, and low transaction costs associated with the carbon pricing.

The opposite of certain is what we get with the quantity mechanism of cap-and-trade. The investor faces a volatile, uncertain profile of future emissions costs. The ETS experience has demonstrated great volatility. Volatility is the enemy of what we urgently need — that is fast decisions to stop building dirty coal power generation, substituting the larger capital investments required for low- or zero- carbon plants.

The cap and trade scheme creates a new administrative monster that will be impossible to kill off once it gets going. Envision an apparatus ten times bigger than the Dept of Agriculture. Do not forget that cap and trade requires measuring and auditing reported quantities of emissions. Cap and trade will create a rich growth medium for rent seeking — which leads inevitably to corruption.

In “Bootleggers, Baptists, and Global Warming” Bruce Yandle looks at the post-Kyoto negotiations in the light of the “bootleggers and Baptists” theory of regulation. Yandle points out that in the South, Sunday closing laws make it illegal to sell alcohol on Sunday. These laws are maintained by an inadvertent coalition of bootleggers and Baptists. The Baptists (and other religious denominations) provide the public outcry against liquor on Sunday, while the bootleggers (who actually sell liquor on Sunday) quietly persuade legislatures and town councils to maintain the closing laws. In this paper, Yandle explains that something similar is happening with the treaty negotiations over climate change. Baptists are the environmental groups, and bootleggers are the companies, trade associations, and nations that are seeking favors through the global warming negotiations.

In the previous post Life After Kyoto: Alternative Approaches to Global Warming Policies I reviewed the 2005 Nordhaus study of the same name — which I think very compactly demonstrates the real-world advantages of harmonized carbon taxes vs. cap-and-trade.

Non-economists will probably always be uncomfortable with using indirect instruments like prices, just as patients may wonder how little yellow pills can cure their disease. Nonetheless, the fact that prices are more indirect than quantity restraints should not prevent us from recognizing their superior power as a coordinator and motivator for global warming.

For an in-depth exposition of the superiority of the carbon tax strategy, see The Challenge of Global Warming- Economic Models and Environmental Policy by Yale’s William Nordhaus. You can read a clear discussion of the above issues by searching the PDF for this section The Many Advantages of Carbon Taxes [A. Prices versus Quantities for Global Public Goods].

Nordhaus has probably done the best work demonstrating the many efficiencies of price schemes over quantity schemes. As just one example, a key requirement of any scheme is that it be adaptive. In Nature, 8 May 2008: among the 4 letters responding to the Nature PWG commentary is this letter from Richels, Tol and Yohe, which makes the point on the adaptive requirement better than I have:

In their Commentary ‘Dangerous assumptions’ (Nature 452, 531-531; 2008), Pielke et al. show that the 2000 Special Report on Emissions Scenarios (SRES) reflects unrealistic progress on both the supply and demand sides of the energy sector. These unduly optimistic baselines cause serious underestimation of the costs of policy-induced mitigation required to achieve a given stabilization level.

This is well known among experts but perhaps not to the public, which may explain why some politicians overstate the impact of their (plans for) climate policy, and why others argue incorrectly that ‘available’ off-the-shelf technologies can reduce emissions at very little or no cost.

The numbers presented by Pielke et al. are revealing, but they divert attention from a more serious problem underlying the SRES approach to calculating mitigation costs: a failure to incorporate the dynamic nature of the decision problem into climate-policy analysis. Until we can keep adjusting the analysis by continually incorporating uncertainty, correction and learning, we shall continue to offer policy-makers an incomplete guide to decision-making.

The focus of policy analysis should not be on what to do over the next 100 years, but on what to do today in the face of many important long-term uncertainties. The minute details of any particular scenario for 2100 are then not that important. This can be achieved through an iterative risk management approach in which uncertain long-term goals are used to develop short-term emission targets. As new information arises, emission scenarios, long-term goals and short-term targets are adjusted as necessary. Analyses would be conducted periodically (every 5-10 years), making it easier to distinguish autonomous trends from policy-induced developments — a major concern of Pielke and colleagues. If actual emissions are carefully monitored and analysed, the true efficacy and costs of past policies would be revealed and estimates of the impact of future policy interventions would be less uncertain.

Such an approach would incorporate recent actions by developed and developing countries. In an ‘act then learn’ framework, climate policy is altered in response to how businesses change their behavior in reaction to existing climate policies and in anticipation of future ones. This differs from SRES-like analyses, which ignore the dynamic nature of the decision process and opportunities for mid-course corrections as they compare scenarios without policy with global, century-long plans.

For a recent study of the costly, messy world of trading permits and offsets see the April 2008 working paper [PDF] by reliable sources Michael Wara and David Victor. Excerpt:

This article reviews the actual experience in the world’s largest offset market–the Kyoto Protocol Clean Development Mechanism (CDM)–and finds an urgent need for reform. Well- designed offsets markets can play a role in engaging developing countries and encouraging sound investment in low-cost strategies for controlling emissions. However, in practice, much of the current CDM market does not reflect actual reductions in emissions, and that trend is poised to get worse. Nor are CDM-like offsets likely to be effective cost control mechanisms.

This is excellent work — and compelling results. I hope that all the politicians pushing “son of Kyoto” deals will read it and think carefully about what they are proposing.

Corn ethanol, bootleggers & Baptists

Bruce Yandel’s Bootleggers and Baptists framework explains many odd informal political alliances. Corn ethanol is one example:

…corn ethanol has been the lucky beneficiary of an American political quirk, first pointed out by economist Bruce Yandle in a famous 1983 article in the journal Regulation. In the article, Yandle, now dean emeritus of the Clemson College of Business and Behavioral Sciences, recounted that, while he worked at the Federal Trade Commission, he noticed a funny thing about regulations that captured the public’s imagination and managed to endure. These regulations evolved not because of rational cost-benefit analysis, Yandle wrote, but because of odd alliances between what he called “Bootleggers and Baptists.”

The theory goes like this: during America’s long debate over alcohol in the first part of the 20th century, religious folks in shorthand, the Baptists provided a moral narrative for limiting sales. They sincerely believed government should support sobriety. They lobbied their representatives to enact Prohibition. That belief, however, sealed them into a marriage with the bootleggers, who were, in effect, rent-seekers profiting from rules that prevented law-abiding competition.

In 2005, ethanol plants consumed 14 percent of the nation’s corn crop. Producing seven times as much fuel, under Bush’s proposed mandate, would put the proportion close to 100 percent.

Yandle suggested that most regulations could be viewed in this light. Groups with moral motives provide cover for those who benefit economically (groups that, unlike bootleggers, typically operate within the law), even if the two sides don’t have much else in common. So far, this dynamic has propelled ethanol from obscurity to the center of American energy policy. Environmentalists play the Baptist role, urging governments to force us to be moral in our fuel choices. The Natural Resources Defense Council, for instance, has called ethanol “energy well spent”. Corn farmers and ethanol industrialists become the bootleggers, quietly enjoying the monetary green their questionable green status confers on them. (And, of course, you have the delightful irony of ethanol being alcohol, source of the real bootleggers’ lucre.)

From teachers’ union bosses pushing smaller class sizes “for the children” to banks cheering consumer-protection laws that crowd out small players, Yandle’s theory holds pretty well. In the politics of ethanol, though, the VCs and the biofuel entrepreneurs they are funding are creating a new twist to these odd alliances: they’re combining the bootlegger and Baptist roles.

I highly recommend Russ Roberts’ Econtalk interview: Bruce Yandle on Bootleggers and Baptists. For the original paper see Bruce Yandle’s Bootleggers, Baptists, and Global Warming for a
summary including full pdf link from the Political Economy Research Center.