The Economics of Parking

Parking seems like a small detail of city life, but economists argue it has large effects on traffic, housing costs and the shape of cities. The urban planner Donald Shoup, in his 2005 book The High Cost of Free Parking, made the most famous case.

Free parking is not free

Land used for parking has value. When parking is free or cheap, its cost is paid by someone else: through higher prices in shops, higher rents, or taxes. Everyone pays, whether they drive or not.

Minimum parking requirements

Many cities require new buildings to provide a minimum number of parking spaces. Shoup argued these rules:

• Raise housing costs, since parking spaces are expensive to build, especially underground.
• Encourage driving, by guaranteeing parking everywhere.
• Spread cities out, as parking takes up land.

Some cities have removed parking minimums, including Buffalo in 2017, Minneapolis in 2021 and California for developments near public transit from 2023.

Cruising for parking

When street parking is underpriced, drivers circle looking for spaces, called cruising. Studies in busy city areas have found that a noticeable share of traffic can be drivers searching for parking, adding congestion and pollution.

Pricing parking

Shoup recommended charging prices for street parking that keep a few spaces free on each block, often around 85 percent occupancy. San Francisco’s SFpark programme, launched around 2011, adjusted meter prices based on demand. Evaluations found it made it easier to find parking and reduced cruising.

India’s cities

Indian cities face severe parking shortages as car ownership grows. Delhi and other cities have drafted parking policies proposing higher charges for on-street parking and restrictions in crowded areas to encourage public transport.

Accessibility

Parking policies must protect accessible parking spaces for disabled drivers and passengers, and ensure pavements are not blocked by parked vehicles, which is a major hazard for blind pedestrians.