May 3, 2005
The economics of free parking
Lynne Kiesling of Knowledge Problem has a thought-provoking post on free car-parking, prompted by an NPR interview with Donald Shoup, a professor of urban planning at UCLA:
He makes arguments along the lines that nothing is free (where have we heard that before?), and that the cost of providing for free parking gets reflected in the goods and services we buy, as well as in land values… he said quite simply that municipalities providing free parking subsidizes driving and reduces demand for public transportation.
For what it’s worth, I’ve never fully understood the claim that automobiles are subsidized (certainly not anything like as much as alternative forms of transport). In fact Transport Blog nicely sums up my view:
On the contrary, in the US, the Federal Highway Trust Fund, which is paid for by motor fuel excise taxes, is regularly raided to support the general fund. In California, as with many other states, the general fund is also enhanced by sales taxes on motor fuels while taxes and use fees on vehicles more than cover the cost of the road system.
But back to parking. In most European towns and cities paid parking is the norm, which in theory enables local councils to offset some of the community costs Shoup objects to. (In practice, a hefty chunk of the revenue usually goes to commercial car-park operators, although some city-center lots are both owned and operated by the councils themselves.) A good example is Britain, where since 1991 councils have been empowered to spend the money they earn from car parks, meters, penalty tickets, clamping and tow-away charges on improving transport.
The problem is that when you hand parking over to town planners, you simultaneously introduce all kinds of distortions into the marketplace. European councils set parking fees to meet randomly set revenue targets, not to optimize usage. The result is that parking fees vary wildly from town to town, driving shoppers to where parking is cheapest—and causing large (and arbitrary) swings in revenues for affected businesses.
Moreover, paid parking in a central location (the usual European solution) invariably causes severe traffic congestion in the area immediately around the lot itself, and moderate congestion in surrounding streets (where drivers vie for the few free or cheaper parking spaces).
When retailers provide onsite parking—often impractical in Europe’s small and crowded towns—the traffic load is spread more evenly. Moreover, onsite parking uses the marketplace to apportion costs, and generates additional business proportional to each retailer’s investment. This, in turn, means more jobs and more taxes flowing into municipal coffers. Those extra revenues can then be used to pay for everything from road improvements to subsidizing public transport.
Of course, there’s always Park & Ride, but that raises a whole different set of issues...
Posted by Stephen at 12:30 AM in Economics | Permalink | TrackBack (0)
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