High Traffic Density: The Impact on Malta & Maltese Poperty Market

High Traffic Density

Impact on Malta & Maltese property market October 2015

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Table of Contents Introduction ........................................................................................................................................................................... 3 Current situation in Malta....................................................................................................................................................... 4 Effects of High traffic density ................................................................................................................................................ 6 Property Market ................................................................................................................................................................. 6 Residential Social Structure ................................................................................................................................................ 7 Health ................................................................................................................................................................................ 7 Road Congestion................................................................................................................................................................... 7 Road space? ....................................................................................................................................................................... 8 Solving road congestion: Role of the government................................................................................................................... 9 Conclusion ........................................................................................................................................................................... 13

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Introduction Being stuck in traffic is something that every Maltese person experiences on a daily basis. Nowadays, with the ever increasing use of motor vehicles many European countries face a similar problem: ‘High Traffic Density’. Data for the European Union shows that passenger driven kilometers by car rose by a factor of 2.5 between 1970 and 2000 and increased by another 10% since. Malta is one of the leading EU countries with the highest motorization rate (602 passenger cars per 1000 inhabitants). The highest number of cars per inhabitant was also recorded in Malta, along with Luxembourg and Italy (Eurostat, 2014). As one can imagine this leads to an inevitable outcome. Unfortunately, the problems that traffic brings with it, is not only limited to road congestion but there are even greater negative effects on the environment, public health and the property market. Increased vehicle traffic harms the residential living quality, lowers local property prices, damages the environment and poses a serious threat to public health. The purpose of this report is to address the traffic problem in Malta, explain its affects on the Maltese property market, and to present solutions to the traffic problem.

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Current situation in Malta Maltese people have been experiencing serious traffic problems since many years now. Currently traffic costs Malta €271 million a year (Vella, 2015). A study done by the Institute of Climate Change and Sustainable Development shows that unless drastic changes are made these costs will rise and traffic will cost the Maltese Government and transport authorities €317 million a year by 2020. The sum of €317 million includes the cost of accidents, congestion, climate change, pollution costs and noise. Amounts stated above do not include other intangible ‘costs’ that are caused by traffic. Think for example when people are forced to move to a different home, pay more rent than usual, or losing the right to live in a quiet and peaceful environment.

Traffic nuisance is an impairment of residential quality. Although these costs have no monetary value, Maltese people still have to pay in one way or another. A recent survey done by acknowledged companies (such as InsightPolls) in the field of online surveys, marketing and public affairs show that top 3 major concerns of participants were Immigration, Environment and Traffic (Independent, 2015). See Table 1 below: Table 1: Main problem Malta is facing

% Immigration

32

Environment

25

Traffic

20

Cost of living

7

Health

4

The international situation

3

Economy

3

Education

3

Law and 0rder

3

Unemployment

2

No particular problem

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> 1%

When participants of the survey were asked to state their main concern, the result was even clearer. Table 2 below shows the level of concern for each problem that was presented in the survey. The biggest personal concern for participants was the traffic problem with 25% (Independent, 2015).

Table 2: Main personal concern % Traffic

25

Income

20

The environment

14

Immigration

13

Stable employment for oneself or family member

7

Cost of living

7

The environment where I live

3

Health

3

Education

2

Personal security

2

No particular problem

3

The objective of the final part of the survey was to find out what the Maltese population thinks about environmental matters and a number of questions were asked. Table 3 below shows a list of issues and the percentage of participants that were concerned or not concerned with that particular environmental issue. As illustrated 90% of the participants are concerned by air pollution caused by traffic (Independent, 2015).

Table 3: Concerns about the environment Concerned

Not concerned

%

%

Air pollution caused by traffic

90

10

Quality of air

85

15

Building development in the

81

19

Climate change

71

29

Water in water table

69

31

countryside

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Waste management

68

32

From the results of this survey it can be concluded that the majority of Maltese people are not happy with the current situation and are really disturbed by the traffic problem. But why are people concerned with high traffic density? What are the negative effects of traffic externalities? The following chapters will discuss this in detail.

Effects of High traffic density There are many adverse effects of high traffic density. The possible implications of high traffic density cover a wide range and reach far beyond road congestion. There are many other effects that most people overlook.

In addition to congestion, high traffic density is causing a major impairment to health, the residential quality and the Maltese property market in different ways. It is affecting almost every aspect of human life. Traffic pollution and nuisance affects social structure and property market in neighborhoods. Many studies in various countries have proved these issues (Difu, 2015).

Property Market Devaluation of housing due to negative environmental effects of high traffic density is one of the major effects of high traffic density. Properties affected by high traffic density will devaluate in price, whereas properties with similar characteristics but not affected by high traffic density will relatively increase in price.

Buying a property is likely to be one of the most, if not the most important purchase during a lifetime. So how does high traffic density and road congestion affect housing prices? Noise is one of the most important sources of traffic nuisance. Literature on the effects of traffic noise suggests that a noise level of around 45 decibels and higher people experience noise as annoyance. Above a level of 60 decibels noise may lead not only to annoyance but also to health damages such as: sleep disturbance, heart disease etc. (World Health Organisation, 2009).

Who would enjoy living in a noisy house without peace and tranquility? In a research done on this matter in the Netherlands it was found that a 1% decrease in the traffic density results in a 0.02% increase in the prices of houses which means that decreasing traffic density by half induces a 1% increase in housing prices.

In a similar research done in Hong Kong (one of the most congested metropolitan cities in the world) it was found that for every 1 Decibel increase in the noise level, the corresponding price of residential flat decreases by 0.31%.

From past studies and information we can conclude several facts. Firstly, facing a busy road has a negative effect on properties due to noise pollution. The difference in price between a property subject to direct noise from road traffic and a property that shielded from such pollution can differ significantly.

Secondly, the actual noise level (as measured in Decibels) has a direct detrimental effect on the price of residential properties. This can be used as a measure of the preference of homebuyers in certain neighborhood for quietness. As the residential real-estate market is highly segmented, potential purchasers in different neighborhood may have different preferences for quietness, and may be willing to pay a different price for securing it.

High traffic density and noise is affecting the property market in Malta by shaping property prices and creating residential segmentation in general.

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Residential Social Structure As the residential quality is affected so does the residential social structure. Although traffic noise has a detrimental effect on property prices, it does not abrogate even greater factors such as location, housing quality and locational advantage etc. Members of lower social classes live more frequently on busy main roads than people with higher social status. It has to be said that high quality homes can be found in areas strongly affected by traffic, yet still remain attractive. Although these property prices are lower than in comparable areas with no traffic nuisance they are still higher than property prices in simple residential areas. The reason why these high quality homes in busy areas remain attractive is because there are other compensational factors making up for it. These factors include the neighborhood, nearby facilities, the home itself and physical structure levels.

Health When we look at the health impact of traffic noise caused by high traffic density, there is an interdependent relation between traffic noise and human health. The World Health Organization (WHO) recognizes community noise, including traffic noise as a serious public health problem. People who are exposed to traffic noise consequently suffer from a wide range of health effects. These include annoyance, sleep disturbance, disturbed cognitive functioning, cardiovascular disease and adverse effects on mental health. As shown in Figure 1 below, one health problem can lead to the other. For instance, when people are exposed to high levels of noise they will suffer from sleep disturbance. This will in turn lead to annoyance and stress. As one can guess this stress can trigger the production of certain hormones such as cortisol and adrenaline and in the end it can cause even worse health problems such as cardiovascular disease and psychiatric disorders. The most widespread problem created by traffic noise, however, is annoyance.

Road Congestion Road congestion is every Maltese’s nightmare. There are many underlying reasons why road congestion happens. So why exactly does road congestion occur so often in Malta?

To begin with, the so called ‘real cost’ of driving has fallen because motorized vehicle prices and the gasoline/petrol prices are relatively affordable - the gasoline price in the Netherlands is currently 1L/€1,80 and in Malta 1L/€1,53. As the real cost of driving fall, more and more people choose the road.

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Furthermore, public transport is deemed as an ineffective way of transportation and is yet to regain the trust from the majority of daily travelers.

Last but not least, the fixed cost of buying and owning a car is indirectly ‘forcing’ people to use their vehicles as often as possible. Think for example on costs like motor insurance, car tax and depreciation. When people own a car and won’t use it, these costs keep ticking, this leads to the feeling of throwing away money if the car is not used often enough.

Road space Unlike solar energy, road space is a scarce resource, which means that the more people use road space, the less is available to use by others. This has led to the concept of road-space which policy makers are using to make new policies that can reduce congestion. Previously roads were seen as a public good. This way of thinking is changing as roads are more and more seen as a private good which can be charged for. With new system technology the use of road space can be charged for.

Effects of Road congestion Road Congestion has many direct and indirect external effects such as: Property market: Imagine a street that is congested day and night. The residents that have to deal with this problem are forced to either move to another area further from the populated areas, where it is less congested or stay and deal with this inconvenience every single day. Property prices are also being affected by road congestion. In areas with high traffic density and congestion, property prices are lower compared to similar areas with relatively lower traffic density. People who are living and working near the busy areas either have to deal with this burden or move to a farther away place with increased travel time, just for the sake of having peace and tranquility at home. Lower rent prices are attractive for tourists since they stay in Malta for only a limited amount of time, making it harder for Maltese citizens to rent or purchase a house in these busy areas.

Extra travelling time: While the absolute distance stays the same, the relative distance becomes longer. People are taking longer to go from point A to point B. Extra travel time also has creates among other things stress and annoyance.

Increased Business costs: Think of the saying ‘Time is money, wasted time means wasted money’. Companies that deliver products to various shops and logistics companies are being affected quite hard by this congestion. Congested roads make transports very ineffective and inefficient for such companies which lead to increased business costs.

Emergency services: Emergency vehicles such as Ambulances, police-cars, fire trucks can’t function at the desired level.

Congested roads become a real obstacle and cause emergency services to take longer to react to emergencies than usual.

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Increased pollution: As stated earlier in this report, Maltese citizens’ main cause for concern is air pollution caused by traffic. The more motorized vehicles on the road, the more CO² emissions in our atmosphere. Road transport contributes about one-fifth of the EU’s total emissions of CO² (European Commission, 2015).

Increased probability of more accidents: The probability for small traffic accidents are relatively higher on congested roads than on free open roads, due to the cars driving so closely to each other.

More stress for drivers, cyclists, passengers and pedestrians: Related to the health effect mentioned before, Maltese citizens in general are experiencing increased levels of stress due to congestion.

Solving road congestion: Role of the government First and foremost, the Maltese Government plays an essential role in solving the traffic problem. There are several ways to deal with road congestion. Currently the government is researching and working on trying to fix the problem. Transport Minister Joe Mizzi told the Times of Malta: ‘We are taking it very seriously. We’ve already effected some short-term modifications.’ We’ve also decreased the size of some roundabouts to allow for a better traffic flow’.

One of them is to increase the supply of road space, which basically means building more roads and providing more space for vehicles. However, when the road supply increases, so does demand for road. On the short term these measures sounds very promising, but imagine a new road being built in your area that reduces travel time significantly. This road will most certainly also attract your neighbors, and in the end the result will be the same. Building more roads is easier said than done, since there are very high building costs and opportunity costs related to it. Besides this, there is also a long lag time between planning, executing and finalizing such projects. This basic graph below shows the relation between the Price of road space and the Quantity road space (EconomicsOnline, 2013).

Graph 1: Increased supply of road space

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A secondary measure is reducing the demand for road space. This can be done in two ways: 1Decreasing car ownership 2- Decreasing car usage.

Graph 2: Reducing demand for road space

How can a government reduce demand for road space? There are several options that include:

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1 - Raising fuel taxes and car taxes Higher taxes will discourage people using their cars as often as they did before the tax increase. However, this will bring certain economic implications with it.

2 - Raising the age limit This option has a direct effect on the number of drivers on the road and also their level of maturity which helps reduce the risk of accidents.

3 - Providing better public transport This is perhaps the most important and effective option that will have both short and long-term effects.

Currently public transport in Malta is poorly regulated and unorganized. Travelling 1.5 hour with the bus to a destination that should normally take 30 minutes is not uncommon. Especially in the mornings when the traffic density is at its highest. This phenomenon can be seen daily. If the public transport system is improved more and more people will switch to using public transport instead of their private vehicles, which in turn will reduce the amount of cars on the road significantly.

It is important to note that one of the highest equipment rates was recorded in Malta. Figure 2 below shows the number of public transport vehicles per 1,000 inhabitants in Europe. In Malta this number was at least 6 per 1,000 inhabitants. The average in the EU was 1.7. This means the public transport in Malta is heavily occupying roads in Malta. If the public transport system remains unchanged high traffic density can never be fixed. Transport Minister Joe Mizzi said: ‘It is very important to ensure that public transport is accepted by the Maltese so that as much people as possible shift to making use of it.’ (Dalli, 2014).

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4 - Operating park and ride schemes Park-and-ride facilities are car parks with public transport connections that provide commuters and other people headed to the busy city center a place to leave their vehicles and transfer to a bus. An example of this is the Floriana Park-and-Ride scheme. However, these schemes have to be neatly organized and regulated in order to provide a good service and making it not inequitable for people who are making use of this system.

Lately people who used the Floriana Park-and-ride system have suffered because of excessive long waiting times for the mini vans to take them into Valletta. This led to people being late for their meetings in Valletta.

Such unfortunate occurrences are discouraging people in using such facilities.

5 - Increasing parking charges The problem in this measure is that the charge has to be so high that it will lead people leaving their cars at home and choose for public transport instead. In order for the parking charging system to be effective, the current public transport system has to be improved to such a high level that people will not regret not using their car (EconomicsOnline, 2013).

6 - New policy for commercial transports The government can introduce new policies that reduce traffic intensity during certain times. For example, prohibiting distribution/delivery companies to deliver their products to shops after 7 am. This will greatly reduce the pressure on the roads and help for a better traffic flow. Stationary delivery trucks are having a huge impact on the traffic flow.

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Conclusion High motorization rates along with an ineffective and inefficient public transportation system led to the current traffic problem in Malta. Malta has an enormously high number of cars for the size of its roads.

Surveys show that high density traffic is a major concern for the Maltese people as well. It is not only causing road congestion, but also pollutes the living environment, deteriorating residential living quality, lowering property prices and manipulating the social residential structure. High traffic density is causing stress and annoyance which in turn may lead to even severe health problems. The public transportation system is one of the major causes for the traffic problem in Malta. The government plays a critical role in solving the traffic problem in Malta. Every measure that can be taken however comes at a price. Solving this problem will not be easy.

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Bibliography Dalli, K. (2014, November 4). TimesofMalta. Retrieved from TimesofMalta: http://www.timesofmalta.com/articles/view/20141104/local/minister-explores-options-to-cut-traffic-congestion-forgood.542566 Difu. (2015). Socially Selective Traffic Nuisance in Neighborhoods. Berlin: Deutsches Institut f端r Urbanistik.

EconomicsOnline. (2013, January 1). Road Congestion. Retrieved from www.economicsonline.co.uk: http://www.economicsonline.co.uk/Market_failures/Road_congestion.html European Commission. (2015, October 6). Climate Action Road Transport. Retrieved from ec.europa.eu: http://ec.europa.eu/clima/policies/transport/vehicles/index_en.htm Eurostat. (2014, July 1). Statistics. Retrieved from ec.europa.eu: www.ec.europa.eu Independent. (2015, July 10). Independent. Retrieved from Independent Web Site: http://www.independent.com.mt/articles/2015-07-10/local-news/Immigration-environment-and-traffic-are-main-issues-in Malta-survey-6736138630 Vella, M. (2015, January 30). Traffic Congestion. Retrieved from MaltaToday: http://www.maltatoday.com.mt/news/national/49034/traffic_congestion_costing_country_274_million_a_year#.VhusWP ntlBf World Health Organisation. (2009). Noise Guidelines for Europe. Copenhagen: WHO.

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