We're parking up the wrong tree

With air pollution linked to nearly 40,000 deaths every year, tackling London’s air quality crisis will be one of new Mayor Sadiq Khan’s biggest priorities. It’s a shame then to see that he’s neglected one free market solution on offer. Using market demand to set parking charges could bring emissions down by reducing congestion and encouraging more people to use public transport. It’d also raise more revenue for Borough councils, allowing them to bring council tax rates down.

People often talk about parking spaces as if they were public goods, yet as MarketUrbanism’s Emily Washington points out, parking spaces are not a public good like clean air. By breathing in clean air I don’t diminish the amount of clean air available for you, yet this isn’t the case with parking: every person who parks deprives everyone else of that parking space. Giving away a scarce resource for free should be anathema to conservatives, yet bizarrely it’s often Conservative politicians who make the case for either free or heavily underpriced parking. As UCLA Urban Planning Professor Donald Shoup keenly observed “Staunch conservatives often become ardent communists when it comes to parking”. 

For example, last year former Community Secretary (and former ardent communist) Eric Pickles imposed a series of regulations on local councils, making it harder for them to raise revenue from parking charges, with restrictions on parking enforcement and ring-fencing for what the money raised by parking charges can be spent on. Pickles argues that keeping the cost of parking low will benefit both motorists and the high street.

But, the evidence doesn’t stand up. What underpricing parking actually causes is excessive congestion as the scarcity of parking spaces encourages drivers to cruise around looking for an empty space. Prof. Shoup looked at sixteen different studies, which measured cruising behaviour in the central business districts of major cities. He found that they average time spent cruising for a parking space was around 8 minutes, and that at any one time 30% of cars in the traffic flow were cruising for a parking space.

This is no less true when the parking is provided by a council, and not a private landowner or business—we should want government organisations to ape private firms by using prices to clear markets as much as possible.

Cruising isn’t the only way underpriced parking causes congestion. Cheap pricing acts as a subsidy to motorists at the expense of the tax payer. 95% of parking away from home is free to the motorist, and households spend on average £47 a year on parking, a very small fraction of the £1,600 per vehicle spent on fuel each year.  Yet Shoup’s research suggests that the value of a parking space in a major city, is something in the range of tens of thousands of pounds. If motorists bore the true costs of car travel, they’d be much less likely to use their car and more likely to switch to public transport, further reducing congestion.

This reduces air pollution in two ways. By reducing both the total number of cars emitting fumes and the amount of fumes each car emits. As cars stuck in slow-moving traffic emit more than those in free-flow.

What about the risk to the high street? Advocates of free parking argue that charging more for parking will hit high street retailers and further contributing to the long term decline in high street retail. But the evidence is weak. Free parking advocates typically rely on surveys of what drivers say they would do if parking prices change, however as economists frequently find out, revealed preferences can differ widely from stated preferences. 

One study in the German city of Herford found that when free parking was introduced it had no effect on overall sales, but did increase traffic. Shoup’s own research suggests free parking can actually reduce the number of visitors to an area, as free parking encourages long parking stays restricting the number of visitors who can actually park. In fact, in many cases it’s the local workers who take advantage of the free parking spaces., reducing the number of spaces available for consumers.

Pricing parking based on market demand would encourage a more efficient allocation of a scarce resource. It would mean less congestion, cut air pollution, and reduced taxes for Londoners. It wouldn’t hurt high streets and with new technology, it’s easier than ever before.