Friday, 27 March 2015

Thoughts on the Economics of Parking

Thoughts on the Economics of Parking

“Formulating policy means making choices. Once you make a choice you please the people you favour but you infuriate everyone else.” Sir Humphrey Appleby, Yes Minister

E.F. Schumacher noted in “Small is Beautiful” that consumption of oil, including that consumed as petrol to run cars, was virtually inelastic:

“It used to be said that the oil exporting countries depended on the oil importing countries just as much as the latter depended on the former; today it is clear that this is based on nothing but wishful thinking, because the need of the oil consumers is so great and their demand so inelastic that the oil exporting countries, acting in unison, can in fact raise their revenues by the simple device of curtailing output.”

And he noted in his later book, “Good Work”, specifically that:

“Because oil is a nonreproducible, nonrenewable asset of limited duration, and the demand is virtually inelastic--there was just as much motoring after the petrol prices had gone up 20 percent as there had been before, and motoring is only the tip of the iceberg of oil consumption.”

Why is this important? Because I believe the same problem over increased fuel costs applies to increased parking charges, as proposed by Transport Minister, Deputy Eddie Noel.

His strategy is to increase parking charges to such a degree – far above the cost of living – to ensure that people leave cars at home and take public transport. That overlooks the convenience of the car, and often the lack of shelters at bus stops. There are more shelters, but they are still relatively few and far between.

And if you live in a relatively inaccessible location, for example – down at Ouaisne – you have a hefty climb to the top of the hill before you stand a chance of catching the bus. The days are long gone when buses – and even the narrower double-decker buses – actually went down to Ouaisne and up before travelling on to St Brelade’s Bay.

So what will happen if parking charges are increased, apart from a lot of grumbling?

Commuters will still commute, but they will tailor their household budget accordingly. They will spend less elsewhere, just as they do when petrol costs go up.

Moreoever, any increase in car parking charges, if it effects anyone, will effect the poorest first. I don’t expect any lawyers, top civil servants (if they don’t already have free parking), dentists, doctors, top management etc moving to the bus.

If changes apply globally, the short stay shopper, the person who comes into town to shop, to go to the doctor, to visit the market, to eat or have their hair done – will look elsewhere when they can. Outlets with free parking, like Grande Marche, will do well, as will out of town destinations, like Quennevais Parade, B&Q, the JEC showrooms etc.

The only way this can be avoided is to have short-stay shopper car parks run like Sand Street, where there is increased premium on long stays. If that remained low for the short term, that would retain short stay spenders.

But as far as the strategy goes for forcing people onto buses – that will not work, any more than high petrol costs force people to take the bus. The convenience (especially in wet weather) of the car is likely to prove relatively inelastic.

If the Minister decides to raise parking charges, then I do feel that the States should also feel the pain, the pocket being pinched. So let the proposition also include States members beginning to pay 50% of what a motorist would pay for their parking, and moreover, make sure that the States members remuneration or expenses are not raised to cover this.

After all, if parking charges increase, we don’t get an automatic rise in salary – so why should they? It is about time States members ceased to be insulated by virtue of their office from the changes they propose.

There is an interesting 2013 study – “Re-Think! Parking on the High Street: Guidance on Parking Provision in Town and City Centres” by Ojay McDonald.

The report is produced by the Association of Town & City Management, British Parking Association, Parking Data & Research International and Springboard Research Ltd. It looked at off-street parking tariffs in around 90 locations around the UK.

It warns that: “Car parking charges cannot be viewed one dimensionally as a simple revenue source for local authorities. If such charges damage the viability of a town centre it will have a knock on effect on the resources available to the authority. Car parking charges must be viewed more holistically as part of an accessibility strategy for town centres which takes into account the need to promote its businesses.”

“Some might question why it is so important to protect the our town centres if out-of-town shopping caters for the car borne consumer, the Internet for those that want to stay at home and the traditional centre for everyone else. The truth is, not thinking strategically about car parking can be an extra step towards the erosion of the town centre’s viability and lead to the under-utilisation of a centre’s assets.”

And they note, for example, that:

“Interventions have also been used to entice shoppers into the town centre but encourage commuters to park edge-of-town to ensure town centres are able to capture spend.”

In their advice, they say: “Calculate the potential impact a rise in car parking revenue will have on the local business community and the subsequent collection of business rates before implementation”

On the high level of car ownership in the UK – certainly also in Jersey, it notes that “the cost of the family car today is the equivalent of just 20 months average annual salary compared to four years average annual salary in 1952” That’s important when it comes to Eddie Noel’s “Stick Argument” for getting people off the roads.

What the Minister is proposing is a very blunt stick, and we haven’t seen any carrots, although they have been mooted on occasion – and are very much what is recommended by the “Re-Think!” report:

“Use smart technology to reward consumers for visiting the town centre and link rewards to the payment process for parking. Smart ticketing, smart cards or even smart phones can provide consumers with intelligent services that could influence their behaviour in a number of ways from switching to public transport or receiving discounts for driving into the town centre during off-peak periods.”

The report “Spaced Out Perspectives on parking policy” (2012) also makes some important point, for example:

“Builders of new estates generally try to maximise their profits by achieving the highest density per acre within local planning constraints, thus restricting off-street availability”

Joined-up government would suggest that transport and planning get together, especially where large developments such as that at Gas Place are proposed. There are not enough parking spaces for one car per flat for the proposed flats, which perfectly illustrates the point made above. Plans should not be approved for large scale development without adequate parking provision, despite the reduction in profits this entails.

On pricing for parking, it notes that:

“The price of petrol, and the cost of parking and its availability, affect drivers in similar ways, with around a half saying that these factors do not affect their behaviour at all, and about a quarter each saying only that they affect their behaviour to a limited extent, whether positively or negatively. When interpreting these views it should be borne in mind that expenditure on fuel is 30 times as high as expenditure on parking.”

That statistic should also give the lie to the idea that increasing car parking charges will force more people to use public transport. If fuel expenditure – which it has already been noted is fairly inelastic – has little effect on commuter behaviour, it is unlikely that parking charges would.

But one effective way is Park and Ride Schemes. These are where drivers leave their cars on the edge of towns and continue into the centre by bus:

“Research by Meek (2010) identified that surveys of P&R users show that up to a third transfer from conventional public transport. This induces car travel for the access portion of the P&R trip, which generally consists of long trips compared to the bus portion, owing to the edge-of-town location of P&R sites” The problem is that it does require high-frequency bus services to be effective.

In conclusion, the use of parking charges as a “blunt instrument” to force commuters to take public transport is too rigidly focused on one objective, and could cause significant harm to footfall in the high street. Existing surveys elsewhere suggest this would be the case, even if there is not a direct link between the two.

Shoppers short stay car parks should all be based on the Sand Street model. This allows differential rates which can be used to penalise the commuter, while not impacting on the shopper and te high street. With only Sand Street currently running this scheme – Minden place is not – it is important to implement this before making significant changes to prices.

Another option – which was successful in changing commuter behaviour – was a Park and Ride Scheme. That should also form part of any successful parking strategy.

As it stands, from the seemingly off the cuff remarks reported by the JEP, this is an ill conceived scheme with no proper data, making untested assumptions on driver behaviour (but ones which will very likely be false given the inelastic nature of the effect of price), and seems to be isolated from a transport strategy in general. It is atomic, and what is needed is a holistic approach to parking.


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