Steve Baron: No such thing as a free lunch - or a free car park

Steve Baron

"Economics is a study of mankind in the ordinary business of life." — So said Alfred Marshall, the great economist, who in 1890 wrote the textbook Principles of Economics.

I doubt if Marshall ever came to Whanganui and looked at the state of our car parking, but his work in economics might certainly help solve our parking problems.
Car parking — or the lack of it — is an issue that nearly every city in the world struggles with, and Whanganui is no different.

When you study economics, the first thing you learn is the principle of trade-offs. There is no such thing as a free lunch and, one way or another, we all pay for everything.

In other words, to get something you want, you must give up something else. For example, car parking in Whanganui could be totally free, but then you would pay in another way by wasting time driving round and around in circles trying to find a parking space, using more fuel, creating traffic congestion and adding to pollution and those ghastly greenhouse gases.

Another principle of economics is that people respond to incentives. In 1935, to solve parking problems in Oklahoma City, the world's first parking meter — known as Park-O-Meter No 1 — was installed.

It was the brainchild of Carl Magee, a newspaper reporter from New Mexico, and, at the time, many people considered parking meters un-American.

But the incentive was that people would be punished for parking too long. By charging people to park, they would usually move on as fast as possible, making parking spaces available.

In places like London, that incentive can be a charged at up to NZ$13 an hour; in Sydney you can pay up to $9 an hour and I regularly paid $6 when I lived there. In Auckland it's up to $4.50, while in Whanganui parking in Victoria Avenue is only $2 an hour.

Some say that is too expensive and others argue it should be higher to make sure parking spaces are available — it's hard to keep everyone happy.

Professor Donald Shoup is a research professor in urban planning at the University of California, and is regarded as an expert in the economics of parking. In his book The High Cost of Free Parking, he says: "Cities should set the right price for curb parking because the wrong prices produce such bad results."

His conclusion is based on 16 studies conducted between 1927 and 2001.

If parking is too cheap, up to 30 per cent of cars are just cruising around in search of a spot, he says. In economics this is called opportunity cost.

Shoup argues that while a few drivers get lucky in finding a park, there is a large social cost for everyone else looking for that elusive empty spot.

One city that has taken a novel approach to congested parking is San Francisco, installing smart parking meters that enable the city to get the price of parking just right. The meters allow them to adjust the price of a parking space in response to occupancy rates.
The plan is to yield one or two open spots in any location, and studies show that when cost fell by $1 an hour, occupancy rose by 7 per cent. However, another study of the San Francisco experiment showed that raising parking prices did not always ensure a parking spot was available.

These smart meters also allow for cash, credit cards and smartphone apps, and the city of Calgary, Canada, has initiated a similar system.

There would be a lot of debate needed to decide if these smart meters were suitable for Whanganui. However, there would be benefits, such as council staff knowing immediately if someone had overstayed their welcome.

That would mean people would quickly get better at following the rules and, therefore, more parking would become available when it is needed. It also means council could be more efficient with staff and there could be savings in this area.

The economic forces of supply and demand are a reality and we must come to terms with them around car parking.

If there is high demand, then the price should go up to incentivise people to move on and open up spaces. If there is low demand, then the prices should go down.

Unfortunately, this economic principle is unworkable in Whanganui at present because supply has not changed much and there is no ability to vary the price of car parking when demand is low or high.

What drivers must understand is that we cannot have free/cheap parking and plenty of parking spaces, because what happens is that parking gets abused or misused when it is free.

Steve Baron is a Whanganui-based political commentator, author and founder of Better Democracy NZ. He holds degrees economics and political science.