In a nutshell: The economics of parking spots

Why is it so difficult for drivers to find a parking space in cities? And what can be done about it? 

Motorists spend an average of 17 hours a year searching for spots on the street, in lots, or in garages. Wouldn’t it be massive progress if there was always a parking space wherever we wanted to go? People would be happier, and we would save a lot of money. Presumably, our prosperity would also be greater since finding a parking space wastes time and gasoline. 

There is an economics solution for the problem, since this problem has an economic origin. 

The problem is that parking is way too cheap. As a result, the demand for parking spaces exceeds supply. 

In Berlin, for example, where I live, you pay 20.40 Euro for a resident parking permit valid for two years. 

A question that quickly arises when higher parking fees are proposed: Will only the rich be able to afford a car in the city? Counter-question: Why should the rich benefit from parking spaces that are too cheap? The thing is, with higher parking fees, cities would generate millions of extra revenue, which they could take to help low-income earners, for example. Plus, although there wouldn‘t be more parking space, there would be less frustration when looking for a parking space. 

The ideal amount to charge is so that most of the spots on a block are used, but there’s usually one or two available for drivers who come along and need to park. 

Will those thoughts ever have a chance of being implemented? Who votes for higher parking fees if they own a vehicle?

There are three reasons why this could happen anyway.

First, not charging means nearly every space downtown is filled almost always. Not being able to park at all discourages even more than a meter would.

Second, more and more cities around the world actually follow the idea of charging market prices.

Third, to be politically successful with this idea, you only have to spend the revenues for a clear purpose. 

What could be such a purpose? – Create parking benefit districts where you charge more and use the money to improve local services in this district, such as better sidewalk cleaning, tree planting and graffiti removal. People would immediately experience the benefits of a reasonable parking fee (I took it from the Journal of Planning Education and Research, where urban planning professor Donald Shoup published the paper “Parking Benefit Districts“.)

Shoup’s central message goes this: The key to success in urban planning is to get the prices right for everything. Or in other words: It’s the market, stupid!

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In a nutshell: The parking problem in cities can be solved by increasing the parking fees and giving the revenue directly back to the citizens.