Priced parking is fair and effective at lowering car use

By Chris McCahill

New research out of California looks at the effect of priced parking on commuter mode choice and transportation costs for low-income households. Findings from two studies suggest raising the price of commuter parking by 10 percent could lower car use by as much as three percentage points and, while residential parking permits could hit low-income households hardest, few households would be disproportionately affected. Moreover, revenues from paid parking could offset any potential burden.

In one new study, researchers dug into the 2012 California Household Travel Survey to better understand how commuters respond to parking prices at work, including direct parking costs and opportunity costs such as cash-out programs and other incentives. Only 3.4 percent of drivers reported paying for parking, and they paid around $8 per day on average, typically on the street or at off-site parking facilities. The researchers developed methods for estimating the opportunity costs of employer-paid parking for each zip code based on available survey data.

They estimate that increasing the price of parking by 10 percent means the likelihood of someone driving to work drops by roughly one or two percentage points on average. The effect varies, however. Raising the price from $2.50 to $2.75 has the largest effect (-3 points). The marginal effect drops as the baseline price increases and the effect is smaller for opportunity costs than for direct parking payments.

With mounting evidence from this study and others supporting the use of priced parking to manage travel demand, concerns have also been raised about fairness of flat fees with respect to low-income individuals. In Los Angeles, for instance, another recent study found that residential parking permits costing $30 per month could increase transportation costs by 10.5 percent for a one-car household earning less than $15,000 per year. That study also found, however, that most households in the lowest income brackets would not need to purchase a permit, either because they don’t own a vehicle or because they could find alternatives to parking on the street. After accounting for vehicle ownership and other factors, transportation costs would likely only increase by 0.8 to 1.3 percent across all income groups. The average increase is only 1.1 percent, and 1.2 percent for the lowest earners.

These cost burdens, according to this study, should not be an impediment to priced parking schemes. The revenues, for instance, could be used to offset costs for low-income households and bolster alternatives to driving.

Chris McCahill is the Deputy Director at SSTI.