Demand-priced Parking

August 23, 2016 Donald Shoup

Re-thinking the way we handle parking can make an enormous difference to our communities, says Donald Shoup. The distinguished professor of urban planning at UCLA was one the first academics to investigate the effects of parking from an economist’s point of view. In his book, The High Cost of Free Parking, Shoup argues that cities should charge fair market prices for on-street parking, use the meter revenue to finance added public services in the metered neighborhoods, and remove off-street parking requirements. We interviewed Professor Shoup and asked him to explain how and why demand-priced parking works.

You have devoted much time to researching the dynamics of parking. What triggered your interest?

I’m not sure how it happened. Maybe I backed in. I wrote my Ph.D. dissertation on land economics, and have always been interested in how cities use land. Few academics had studied parking as a land use, perhaps because it has such low status.

In academia, international affairs have the most prestige, national affairs are a step down, state government is even lower, and local government seems parochial. Then, within local government, parking is probably the lowest rung on the status ladder. So I was a bottom feeder, but there was a lot of food down there.

Why does parking matter so much? What’s the impact of parking on city architecture and quality of life?

In most cities, the footprint of parking is bigger than that of any other land use. Parking spaces are also the most uniform and most frequently rented pieces of land on earth. People are even conceived in parked cars.

I estimated that cruising for underpriced curb parking on the 15 blocks in Westwood Village in Los Angeles creates about 950,000 vehicle miles of unnecessary travel per year. That’s equivalent to 38 trips around the earth or four trips to the moon.

And here’s an inconvenient truth about underpriced curb parking: cruising those 950,000 miles per year in Westwood wastes 47,000 gallons of gasoline and produces 730 tons of carbon dioxide per year. If all this happens in one small business district, imagine the cumulative effect of cruising for underpriced curb parking in all the world’s cities.

One of your ideas is that free parking comes at a high cost. Instead you propose demand-priced parking fees. Can you explain the concept? What are the benefits?

Cities should charge the right prices for on-street parking because charging either too little or too much can do great harm.

If the price is too low and no on-street spaces are vacant, drivers searching for a place to park will congest traffic, waste fuel, and pollute the air.

If the price is too high and many on-street spaces are vacant, adjacent businesses will lose customers, employees will lose their jobs, and cities will lose tax revenue.

Consequently, the right price for on-street parking is the lowest price that can keep a few spaces open to allow convenient access for motorists. This is the Goldilocks principle of parking prices.

Underpriced on-street parking increases traffic congestion, air pollution, and carbon emissions, which all cities are trying to reduce. The simplest, easiest, fastest and cheapest way to reduce traffic congestion, improve air quality, and delay global warming is to increase the prices for underpriced on-street parking spaces.

Demand-based pricing is remarkable for how little planners need to know to do their job. They simply compare the actual parking occupancy with the desired parking occupancy and every few weeks they nudge prices up or down accordingly. A simple feedback loop replaces rigid prices set by politicians. Seeking the optimal occupancy becomes the new way to set prices, and it can replace intense, emotional, political choices with evidence-based decisions.

What’s the role of technology in making parking better?

A few cities have begun to vary parking prices according to demand. They set the prices by block and time of day to produce one or two open spaces on every block and thus reduce cruising.

San Francisco has the most ambitious program. In seven pilot zones, San Francisco installed 7,000 sensors that report the occupancy of each space on each block, and parking meters that charge variable prices according to the time of day. The city adjusts parking prices every two months in response to the observed occupancy rates – the prices go up on overcrowded blocks and down on under-occupied blocks.

The technology for measuring parking occupancy and adjusting parking prices is improving rapidly. This better and cheaper technology will allow more cities to adjust parking prices according to demand and thus reduce the harm caused by cruising.

Major innovations have occurred not only in parking technology but also in parking policy. Smart parking requires both smart technology and smart policy. The smart technology makes the smart policy possible, and the smart policy creates the demand for smart technology. It’s a virtuous cycle.

How should cities use meter revenue and why?

To create the demand for a smart parking policy, cities can use the meter revenue to provide added public services on the metered streets so the stakeholders – residents, merchants, and property owners – can see the meter money at work.

Pasadena, California, is the most famous example of this policy. It devotes the meter revenue in its historic core, Old Pasadena, to pay for added public services like sidewalk repair and cleaning. The meters not only manage curb parking but also provide a steady stream of revenue to pay for whatever public service the district wants. To remind everyone where the money goes, the meters have stickers that say, “Your meter money makes a difference in Old Pasadena.” Local control and the added public services are largely responsible for the parking program’s success.

The only reason meters went into Old Pasadena in the first place was because the city agreed all the money would stay in Old Pasadena. People who live, work, shop and own property in the metered neighborhoods can then see their meter money at work and will realize that parking meters are working for them rather than against them.

Some cities use Wi-Fi to communicate between City Hall and the meters to validate credit cards, collect payment data, and change prices. Ventura, California, uses the meters’ excess Wi-Fi capacity to provide free Wi-Fi service for everyone on the metered blocks. The meters themselves provide the free Wi-Fi as a byproduct of communicating with the central station. If you have the meters, you get the free Wi-Fi. If you don’t have meters, you don’t get the free Wi-Fi. If this parking-based policy spreads around the world, I think many parts of many cities will demand hi-tech parking meters that will give free Wi-Fi to everyone.

About the Author

Donald Shoup is Distinguished Research Professor in the Department of Urban Planning at UCLA. His work has focused on how parking policies affect cities, the economy, and the environment. His research on employer-paid parking led to the passage of California’s parking cash-out law, and to changes in the Internal Revenue Code to encourage parking cash out. Shoup is a Fellow of the American Institute of Certified Planners, an Honorary Professor at the Beijing Transportation Research Center, and the Editor of ACCESS. In 2015, the American Planning Association gave Shoup its highest honor, the National Excellence Award for a Planning Pioneer. Find his website here:

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