Carpe Diem

SF’s success with dynamic, demand-responsive meter pricing

neighborhoodstime-of-dayIn August of 2011, about one-quarter (7,000) of San Francisco’s 28,800 metered parking spaces in eight pilot areas (and in 15 of 20 city-owned parking garages) started using dynamic, demand-responsive meter pricing to “open up parking spaces on each block and reduce circling and double-parking,” according to the website of the pilot project, known as SFpark.  SFpark uses “smart meters” and ground sensors to measure parking occupancy and adjusts prices accordingly.

In pilot areas, meter pricing for street parking range from between 25 cents an hour to a maximum of $6 an hour, depending on demand. Hourly rates in city-owned garages adjust to demand, and decrease where there are many empty spaces. Rates are adjusted by no more than 50 cents per hour down or 25 cents per hour up, and no more frequently than once every month.

Now that SFpark has about two years of parking data from the pilot program, some of the major findings have recently been published in the Journal of the American Planning Association in an article titled “Getting the Prices Right: An Evaluation of Pricing Parking by Demand in San Francisco.” Some of the results are summarized here at the SF StreetsBlog, including the following:

1. UCLA urban planning professor Donald Shoup (the “guru of smart parking policy” and one of the co-authors of the study along with UCLA doctoral student Gregory Pierce) said, “The biggest surprise I got was that prices went up and down, but overall, they stayed the same [on average]. The average price actually declined by 1 percent. That surprised everybody. People thought it was just a way to jack up prices, but the city specifically said, ‘We are going to set prices according to this principle.’”

2. The pilot program is providing hard evidence that raising and lowering meter prices is an effective way to keep enough parking spots available for drivers who need them — and to help ensure too many spots don’t sit empty. Keeping, say, one parking spot open on every block “will make the transportation work best — it’ll reduce cruising, speed up buses, reduce air pollution,” said Shoup. “It’s easy to explain a goal like that — we’re aiming at what you want to see.”

3. The “elasticity” of parking demand — the degree to which price changes affect parking occupancy — has varied across different locations and times of day (due to different trip purposes, they surmise), and that drivers changed their behavior most profoundly after the second price adjustment, possibly due to a spike in awareness of the program. As prices have been refined, elasticity has declined.

4. By location, prices appeared to have the lowest impact in highly residential neighborhoods like the Mission and the Marina, while retail districts like Fisherman’s Wharf and the Fillmore saw the most drastic adjustments to new prices (see top elasticity chart above).

5. Drivers were most sensitive to changes in parking prices in the early afternoon (noon to 3 p.m.) than before noon or after 3 p.m., and were more price sensitive on weekdays than during the weekend (see bottom chart above).

From the study’s conclusion:

With performance-parking prices, drivers will find places to park their cars just as easily as they find places to buy gasoline. But drivers will also have to think about the price of parking just as they now think about the prices of fuel, tires, insurance, registration, repairs, and cars themselves. Parking will become a part of the market economy, and prices will help manage the demand for cars and driving.

If SFpark succeeds in setting prices to achieve the right occupancy for curb parking, almost everyone will benefit. Other cities can then adopt their own versions of performance-parking prices. Getting the prices for curb parking right can do a world of good.

MP: The economic lesson here is that: a) whenever you have chronic congestion (or a chronic shortage or parking spaces) it’s almost always because of a failure to apply market pricing, and b) market pricing will almost always eliminate or reduce chronic congestion (or chronic shortages of parking spaces).

13 thoughts on “SF’s success with dynamic, demand-responsive meter pricing

    • Paying female teachers who are members of the teachers union fat salaries without accountability is a valuable political goal. Hence, education will not improve, because they don’t want it to.

      Parking is not something where it is easy to buy votes from politically valuable groups, so they chose to improve it.

  1. So what about running the DMV in the same manner. Want to get a license at peak time? Higher price. Your time is flexible? Lower price. Want a clerk that treats you with respect? Okay, there ARE some limits here.

    • I took my dog for walk near the local DMV the other day – at 7:15am in the morning prior to meeting a friend for breakfast at 7:45.

      I was amazed at the number of people in the parking lot waiting for the 8am open hour!

      at 7:30 people exited their cars and began forming line…in no time at all it numbered 30…

      I do everything in my power to avoid the DMV and never darken their doors unless I have no choice but the DMV has made wonderful progress on getting many functions done online and the last time I was forced to be at DMV to register a title for a trailer, I was shocked at the number of people waiting in line to do things that could be done online.

      the surliness of the clerks is due in part to the “clientele” in my view… some who look rather “sketchy” in my view.. reminding me that virtually anyone including a convicted felon can get a license to drive…

      • The experience with driver license folks varies greatly from big city to small town. And of course since in Tx at least you need not visit drivers license office but once every 12 years it is not to big a deal. Took about 1 hour because one of the two clerks was at lunch, to renew my drivers license. Of course in Tx auto licenses are handled thru the county assessor collector of taxes no dmv at all. (Plus again you can renew that indefinitely by mail. So the complaint must related to dmvs that do both driver licenses and auto registration. Again I do live in a small town and for auto renewal, it is just in and out, just like paying the property taxes. In big cities typically auto renewals can also be done at grocery stores.
        So on the DMV issue it depends on how the state has set things up.
        Now one thing in Tx they have not rationalized is that school districts can have seperate tax offices from the county. This make no sense, since the county has to send tax bills, and the cost to add the schools taxes to this bill are far less than the cost of a seperate tax office. But it appears that the legislature is unwilling to force all taxes to be paid to the county assessor collector, who would then distribute them out.

        • The DMV in Virginia has field concessionaires in the rural areas.

          in the more populated regions including the suburbs, they have what they call “Service centers” which are “take-a-number” affairs…. the local one has about 15 “tellers” and some are dedicated only to certain functions. They handle a wide variety of things from CDLs to beginner licenses to plates for different kinds of vehicles… etc.

    • That would encourage slothfulness on the part of the DMV and I got to tell you for some reason DMV lines are a leftist state problem. I came into an iow DMV in a large Iowa town without I’d – so I had to do everything. I waited in line @10 am for 1 minute – took a written driving test – no wait there either and then when I was done I got the driving test 5 minutes later. Must have been one hour and I had a new licence in my hand – not even a temp. It would take me a several days to do that in a CA DMV.

      If I hadn’t lost my CA license to begin with it would have been a swap taking 5 minutes.

      What gives? Iowa has a similar number ofDMVs per capita – and they are a poorer status yet they are many times more efficient – all government office are actually.

  2. Not sure I saw it here – but the status and availability of parking can be obtained on Smartphones.

    there can be some unexpected behaviors with dynamic pricing also:

    “Study of Minneapolis dynamic priced lanes shows drivers see posted tolls as proxy for congestion – more likely to choose toll lanes when posted prices high”

  3. Peak pricing in electrical consumption could radically reduce the need for new power plants.

    How about charging people who pollute the air?

    • Both have been done, and on a massive scale.

      California charges $0.45 per kWHr (!) while base rates (Tier 1 and Tier 2 run under $0.13 per kWHr.

      Your theory does not actually pan out: no-one can easily shut off electric power demand when it counts. It’s driven by heat waves.Period, stop. Hence, pricing has no impact on peak consumption. Everyone is piling in to buy at the exact same time to beat back the same phenomena: brutally hot weather. For the elderly, it’s really a matter of life or death.

      Paris lost over 10,000 seniors over a SINGLE August weekend a few years back — during a heat wave. It became a national / international scandal. In their case, they did not have access to air conditioning — at all. Paris normally doesn’t get quite that hot.

      In the American midwest, it’s now accepted that each severe heat wave will trigger senior fatalities among the poor — who are compelled by premium pricing to roast until they expire. Normally, a heat stroke victim passes the point of no return before they realize they’re in big trouble.

      So, no radical reduction in new power plants is morally justifiable. We just can’t stop the high demand peaks. EVER.

  4. Mark,

    I also like the average elasticity of -0.4, because that’s the default you use when you have to estimate price sensitivities.

    Theory confirmed by experiments!

    • it’s taking a while but now that technology enables true real-time status- more truer supply/demand pricing is becoming possible – not only with parking but tolls on roads/bridges, electricity, even airline tickets and gasoline (which I notice now can change on a hourly basis sometimes).

      so the next problem is people getting used to seeing prices fluctuate on that basis and more than a few seeing this not a benefit but a way for big bad business to screw people even worse.. I especially notice this with people’s behaviors toward HOT Lanes (dynamically priced toll lanes) – they consider it “wrong”.

  5. If the City would permit more to be done via the Internet, then the trip count would really shrink.

    It took me ALL DAY to file a lien in SF. I had to give up finding a parking spot within walking distance to the City office, and park in Emeryville — across the bay — and then take BART back down into SF.

    All for a document that is perfectly suitable for Internet filing. All that a lien notice is — is a notice that you intend to assert a claim — in court — within a short time thereafter — functionally it’s a mechanism for getting a place in line, nothing more.

    Without a legal filing, such a notice expires of its own accord. Lien notices don’t confer anything more than a place in line…. Should THAT take a trip into the City?

    The party in interest (a building contractor) ALREADY has a state license and a bond to go with it. Fees could be paid electronically, too.

    This situation is replicated across every county in the nation. Sheesh.

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