Felix Salmon writes a bit about Chicago’s somewhat backdoor effort to increase its street parking meters from their current $0.25 an hour to $1.00 an hour next month and $2.00 an hour in 2013:
Chicago’s mayor, Richard Daley, is absolutey on the side of the angels when it comes to green initiatives, and nothing would be greener than managing to reduce the amount of auto traffic downtown. Unfortunately, that hasn’t happened yet — Chicagoans are more attached to their cars than ever. And so maybe this parking-meter initiative is the municipal equivalent of a CEO hiring McKinsey to come in and recommend job cuts: it’s a way of doing what needs to be done while somehow managing to blame someone else.
In any event, Chicago should get much more than $1.157 billion in benefit from this deal. Underpriced on-street parking is the bane of many large cities’ existence: it results in a huge amount of needless congestion as drivers circle around endlessly, looking for a spot to park. I wouldn’t be at all surprised if the benefits from lower congestion are larger than the up-front cash that Chicago is receiving.
This is true, but it should be said that the positive environmental benefit of reduced idling isn’t close to being the main benefit of pricing your street parking correctly. The main benefit is just the fact that if parking is priced correctly — i.e., in relationship to the supply and demand — then parking will be widely available. It ought to be the case that if you drive up to any block in the city, there will usually be a parking space available there for you. On some blocks at some times of day, that may mean that parking is very expensive. But that would merely mean that ability to park on that block at that time is very valuable and that making it available is having large social benefits.
In general, the market price of street parking should be very similar to the market price of garage parking. Since a garage is more secure and protected from the elements, that has certain advantages. But a street spot might be more convenient. So you’d be looking at rough similarity. And in parts of the city where there’s no viable market in garage building, that’s a market signal that parking demand is low and therefore street parking should be very cheap. But where garages are charging a lot, street parking should also be expensive. Among other things, that would reduce the need for new construction to be accompanied by expansive parking garages.
Perhaps more important, it would reduce the tendency for conversations about any new development to become immediately dominated by people’s fear of parking shortages. The whole shortage phenomenon is (as shortages tend to be) a symptom of bad pricing policy. Chicago is a big city with a vibrant downtown and tons of economic activity. Space is limited and expensive. Unless you charge more than a quarter for it, you’ll get shortages.