Parking economics

'They paved paradise and put up a parking lot'.

I have been reading the acclaimed study by Donald Shoup, The High Cost of Free Parking, American Planning Association, 2005 ($59US) 734 pps. This is a lengthy study of parking economics written partly from the viewpoint of economics but more directly for city and urban planners. It is a clearly written and easy to read and there is repetition of material which makes things clear.

As someone interested in traffic congestion I have generally treated parking issues casually. Parking restrictions only deter terminating traffic in a city and, by reducing the demand for terminating journeys, have the unfortunate effect of releasing additional through traffic demands.

I have also been comforted by the notion that cities I am interested in, such as Melbourne, have not increased their supply of on-street parking though they have increased off-street parking. This has in the past seemed to me a good idea but after reading Shoup I am unsure.

Shoup's basic argument is that 99% of all US automobile trips involve ‘free’ parking which is, in fact, anything but free – it has high cost. The average US spot costs more than the average car occupying it. Providing free curbside parking distorts transportation choices, debases urban design, damages the economy and degrades the environment. Basically free curb parking constitutes an urban ‘commons’ that means we devote too many resources to parking which occupies an excessive fraction of our urban landscapes. We also then, as a consequence of free parking and often free roads, travel too much by car – for example, a free parking spot is equivalent to a 22 cent per mile subsidy to the average US journey to work.

The cost of parking is not borne by the commuter who travels but impacts on the cost of everything purchased – housing, restaurant meals, everything. The implied subsidy given to motorists who park free in the US is about the US Medicare or national defense budgets.

Shoup’s basic proposition is that curbside parking should always be priced at a level ensuring motorists never have to cruise to seek parking. Cruising for parking contributes heavily to congestion and is socially wasteful. To ensure cruising does not occur prices should be set so only about 85% of parking positions are filled. With adequately priced curbside parking, regulations on the required extent of off-street restrictions on parking that a new facility must supply are unnecessary. You wouldn’t legislate to insist that restaurants provide a free desert so why legislate that they must provide a certain minimum level of free parking? Developers should be entitled to offer as many or as few parking spaces as they choose. Then the required number of unbundled parking places can be delivered by the market.

On this basis charges for on street parking in Melbourne are too low and parking restrictions on Lygon Street too lax – I have given up on attempts to park in Lygon Street after extended periods of cruising for parking. .

In an interesting table Shoup shows that Melbourne has the second highest ratio of parking area to total land area (the ‘parking coverage rate’) in the world - at 76% we are just eclipsed by Los Angeles at 81%. Shoup takes this high ratio as an index of ‘lack-of-vibrancy’ and as a draw card for traffic that will create congestion problems. The lack of vibrancy argument stems from the reduced agglomeration benefits in having a great deal of space devoted to parking – instead of buildings set in a park we are seen to have buildings set in a parking lot! This does not seem descriptively accurate for Melbourne and I assume this flawed perception stems from the fact that there is almost no free parking in the city. Shoup would reply that Melbourne is attracting too much traffic through under-priced parking and through its largely un-priced roads.

Introducing curbside pricing faces the same political opposition as road pricing and Shoup’s resolution of this real problem is the same in each case – redistribute revenues from parking back to local residents.

This book added to my understanding of the role of markets in regulating traffic flows. It has a specific focus but the inefficiency costs it focuses on are substantial.