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Tuesday, August 31, 2010

Parking basics: 'Performance-Based Parking Pricing'

San Francisco's SFPark trial has raised the profile of performance-based pricing for on-street parking (see a video on this at the end of this post).

I first wrote about this kind of parking pricing in 2008 under the title: "Performance-Based Parking Pricing" - Don't Yawn! It could be the next big thing. It's nice to make an accurate prediction now and then. Here is an updated and improved version of what I said in 2008: 

If the topic of parking pricing makes you yawn then think again! This is a hot topic in urban transport policy at the moment. Lately, I have been asking students and training groups these questions about on-street parking:
What is the right price of kerbside parking in a busy shopping street in a city? And how can we tell when we have the wrong price?

I have tried this with three groups so far. With a little prodding they agreed that (if pricing is to be the main mechanism to encourage turnover):
The price is too low if there are no empty spots, so most motorists take a long time to find a vacant parking place. The price is just right if there are just enough vacancies so that most people can find a park very quickly (zero search time). And the price is obviously too high if a large number of vacancies can be seen.

They were actually working out for themselves (with a little guidance) the principles of 'performance-based parking pricing'. This innovation has been emerging recently at the urging of UCLA Professor, Donald Shoup. He didn't invent this approach to pricing but Prof Shoup has been vigorous in promoting it and it is a key component in his wider set of parking policy proposals.

Image source: Donald Shoup (2006) The High Cost of Free Parking (APA)
Here is an excerpt from a Shoup article on this at Planetizen:
We can call this balance between demand and supply the Goldilocks principle of performance-based parking prices: the price is too high if many spaces are vacant, and too low if no spaces are vacant. When a few vacant spaces are available everywhere, the prices are just right. If prices are adjusted to yield one or two vacant spaces in every block (about 85 percent occupancy), everyone will see that curb parking is readily available. In addition, no one can say that performance-based parking prices will drive customers away if most curb spaces are occupied all the time.

Here is more from Shoup's item on Planetizen:
Prices that produce an occupancy rate of about 85 percent can be called performance-based for three reasons. First, curb parking will perform efficiently. Most spaces will be occupied, but drivers will always be able to find a vacant space. Second, the transportation system will perform efficiently. Cruising for curb parking will not congest traffic, waste fuel, and pollute the air. Third, the economy will perform efficiently. The price of parking will be higher when demand is higher, and this higher price will encourage rapid parking turnover. Drivers will park, buy something, and leave quickly so that other drivers can use the spaces. For parking, transportation, and economic efficiency, cities should set prices to yield about an 85 percent occupancy rate.

New York's StreetFilms produced a great 5 minute on-line video to illustrate these ideas in 2008. Last month, SFPark brought out a wonderfully clear video explanation of performance-based parking pricing. Scroll down to see the SFPark video.

My guess is that this approach to pricing should be relevant almost everywhere, including parking-scarce Asian cities. In fact, the idea does not just have to apply to on-street parking. It could also be used for off-street parking that is owned by municipalities and governments.

Does anyone know of any attempts to price parking in this way anywhere else besides the current American trials? I think Taipei's approach may come close but the prices don't vary much across the day. Any others?

Would this be legal to try in your city?

Here is the SFPark video in case you haven't seen it yet.

SFpark Overview from SFpark on Vimeo.

1 comment:

  1. Price that always produces the occupancy rate of 80% IS NOT always correct. Sometimes it is not good to charge price that is too low since the increase in occupancy does not always offsets the lost revenue.