Last week Philadelphia increased its annual residential parking permit fee from a negligible $20 a year to a trifling $35 a year.

The city had previously charged a $35 fee to obtain a permit for each vehicle, no matter how many, with a $20 annual renewal fee. The new fee structure bumps that up to $35 annually for the first vehicle — still not enough to cover the cost of the program — and introduces a very slight penalty for each additional vehicle.

A second vehicle permit now costs $50, a third costs $75, and for your fourth vehicle and beyond you’ll pay $100 each. For a block with eight curb spaces on one side, it would cost $260 a year (71 cents a day) to rent half the spaces, and $820 a year ($2.24 per day) to rent all the spaces.

For some context on just how massively subsidized residential parking permits are, my back-of-the-envelope calculation using prices from the 98 parking facilities listed on comparison shopping site BestParking.com says the median market rate for monthly parking in central Philadelphia is $230.

Interestingly, the prices for surface lot spaces and garage spaces are not noticeably different, and appear to be mostly a function of land value. Monthly rates get more expensive (up to $485) the closer one gets to pricey land in the city center, and the most common market rates for off-street parking in close-in neighborhoods hover around the $200-$250 range.

To put the subsidy in perspective, if City Council wanted to stop subsidizing parking and peg residential permit prices to the median market rate of $230 per month, a permit would cost about $2,760 a year. Here is a table comparing rates for residential permits, on-street metered spaces and the median off-street parking facility for different durations:

In practice, people aren’t allowed to rent on-street spaces for more than two- or three-hour blocks of time, and the real on-street parking “market” in most neighborhoods involves a competition for unpriced curb spaces, sometimes with one- or two-hour time limits on blocks where neighbors have opted to petition City Council for parking management.

Predictably, large subsidies for a finite number of curb parking spaces on the narrow streets of Philadelphia drive parking scarcity in close-in neighborhoods, fueling a bitter territorial parking politics that frustrates debate over infill housing development, and a fairer distribution of the public right-of-way between transit, bikes, pedestrians and private cars.

In one recent example, a proposal for a four-story apartment building at 2300 South Street, a walkable, transit-served location on a key mixed-use strip, created a political maelstrom in the Graduate Hospital neighborhood because the developer, Jason Nusbaum, did not plan to provide on-site parking.

Nusbaum said he planned to market the apartments to the growing number of new Philadelphians who live car-free, but neighbors wouldn’t buy it. If any of the new residents did turn out to be car-owners, they reasoned, they’d compete with existing residents for “their” free curb parking. The project is currently dying a slow death by litigation.

Countless infill housing projects have been spiked for similar reasons, and auto-centric politics make it essentially impossible to claw back public rights-of-way now dedicated to parking for new public spaces, transit or active transportation. While some politicians and city officials have been sympathetic to arguments that the parking imperative is corrosive to economic development, housing affordability and transit ridership, so far no one has offered any solutions with a prayer of passing City Council.

Rina Cutler, Philadelphia’s deputy mayor for transportation, argued back in 2008 that curb parking rates should really be around $3 an hour. In a tough vote, City Council raised the rates to $2, but there hasn’t been any discussion since, even with thousands of new people competing for the same number of curb spaces.

“Parking politics has the exact same features everywhere,” says Alan Durning, executive director of the Sightline Institute, a Seattle-based sustainability think tank. “There’s opposition to metering, opposition to extending the hours that are metered. And still the city does sometimes expand meters and extend their hours, but it’s all done by political tug-of-war, mostly when the city council is so strapped for cash and looking for revenues.”

Most of the usual prescriptions for parking policy go nowhere because they run up against the grain of powerful neighborhood groups. But what if there were a policy that could radically change the politics of parking by giving these constituencies precisely what they want?

“The basic issue is that current residents think, rightly or wrongly, that they have some implicit property right, which is the right to park relatively near their house for a modest fee,” says Duncan Black, a Philadelphia-based blogger and former economics professor at UC-Irvine. “And they see any new development as an erosion of their personal property.”

The tools currently used to secure this “right” are economically deadly policies like minimum parking requirements that force developers (and ultimately renters and new homebuyers) to pay for supply expensive on-site parking, so that established residents can continue to enjoy exclusive access to free curb parking spaces.

There is, however, a sensible policy that could deliver exactly that outcome in a way that achieves other pro-growth, environmental and affordability goals: A cap-and-trade system for parking permits.

“The first step is you cap the parking permit rights and say, ‘we’re not going to issue any more. We’ve set the number,’” Black says. Nobody really knows the total number of on-street parking spaces. In Philadelphia, as in most cities, the number of residential permits issued by city government isn’t actually pegged to a specific number of curb spaces.

There’s an open-ended commitment to keep printing parking permits for all comers, which plainly erodes the “property right” to nearby curb parking even more aggressively than new housing development does. Capping permits would change the politics by giving existing residents what they want: Exclusion of new residents from cheap or easy access to curb parking. It also changes the paradigm by creating a new political constituency with a direct financial interest in favor of more development and against new off-street parking.

“If Philadelphia allowed residents to sell their residential parking permits on an open market,” Durning says, “then suddenly the owners of those permits have a strong incentive to expand the number of people who want to park. You have the folks who want to protect their off-street parking spaces, but now there are other folks who are thinking about their pocketbook saying, ‘wow, if we get some more development in here and we stop requiring off-street parking, then I can sell my parking permit on the street for a lot of money.’”

It’s hard to imagine many people greedy enough to show up to neighborhood zoning meetings to testify in favor of new housing solely to make an asset more expensive. But you could measure the real virtue of the policy by how many people stop showing up to zoning meetings to complain about parking. Once convenient curb parking is no longer threatened, NIMBYs would have a much tougher time mobilizing their neighbors against new housing.

The flip side is that new residents — who, again, are already bringing fewer cars with them — would have to pay more for parking. Those who want to bring new cars into the city would have to rent a monthly space in a garage or lot, buy or rent a home with attached parking, or buy someone else’s permit. The parking price increases that City Council doesn’t want to vote for would quietly happen anyway, and no super-voters would care because the permits would inoculate them.

The “trade” part of cap-and-trade is where the politics get interesting and the policy design a bit tricky.

Once capped, parking permits become assets with values greater than $35. How much depends on the number of permits in circulation, as well as the demand for parking and street space. But referring back to the table above, it’s clear that the privilege of avoiding about $2,800 a year in car storage payments would be worth quite a lot of money.

Many existing permit holders, especially those who live close to transit or within a short walk from the city center, might decide that selling the permit and going car-free is in their best interest. Others might decide to ditch their cars and rent the permit out to neighbors, area businesses or college students. Exactly what the “right” is tied to (a residence, driver’s license, license plate, etc.) will shape the opportunities for commerce.

“Ultimately one doesn’t want to grant this property right to residents and have it be an asset that is extraordinarily valuable in the future.” Black says, “We want it to be an asset that has some value and might trade, but not make people rich.”

To avoid a scenario where all the permits end up at one speculator’s house in New Jersey, patiently waiting to be flipped for millions, it might work best to tie the permits to license plates or addresses, enact other safeguards to make sure they aren’t useful outside of Philadelphia, and encourage their use as actual parking permits rather than pure financial assets.

There’s no question there are politically repugnant elements to this plan. But it is repugnant because the thing many residents want — convenient cheap parking for me, but not for thee — is selfish, and this policy gives it to them directly. It is worth noting, though, that this is actually a goal that many city politicians already buy into, based on their actions, and they try to enact it through much more economically damaging and expensive policies.

The first-best option would be for city governments to stop subsidizing parking, full stop, and charge residents and commuters what it actually costs. But the reason to prefer a parking cap-and-trade scheme to the status quo is that while politicians and bureaucrats can sometimes eke out small policy changes that chip away at some parking subsidies, it is clear that the full portfolio of subsidies won’t ever go down by direct vote. To win large-scale policy change, you have to change the politics itself.