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US parodies of San Francisco as leftist and socialist may soon need some revision. San Francisco will soon have the most libertarian, free-market parking policy in the nation. And it should become easier to find parking.

Conventional US policy says that parking should be made available at subsidized discounts or even for free. The fact is, 12 square meters of real estate in a dense city has a land value, and that means it has a fair rental value. What’s the value? Easy. Ask the market.

Under SF Park, the cost of parking on-street will vary by time of day based on observed demand. As their website describes it:

To help achieve the right level of parking availability, SFpark will periodically adjust meter pricing up and down to match demand. Demand-responsive pricing encourages drivers to park in underused areas and garages, reducing demand in overused areas. With SFpark, real-time data and demand-responsive pricing work together to readjust parking patterns in the City so that parking is easier to find.

The goal is to ensure that there’s always a space available, so that people stop endlessly driving in circles looking for parking. People will be able to check online to find out the current parking cost in the place they intend to visit. Parking garages will have a better chance of undercutting on-street rates, so that those garages can fill. If you’ve ever driven in San Francisco, you know that it’s hard to decide to use a garage because, well, if you just drive around the block once more, you might get lucky. Under SF Park, if you just drive around the block once more, you’ll probably find a space, but it will cost more than a garage, especially if you’ll be there for a while. So drivers are more likely to fill up the garages.

If the program fails, which I hope it doesn’t, it will be as a result of being too timid. There will inevitably be pressure to set a maximum parking price, at which prices will stop rising, which means that space will fill up, which means that everyone will be driving around the block again. Andrew Price at Good asks: Could parking costs reach $10/hour? Conceivably yes, for a few high-demand hours, which are almost certainly also hours when transit is abundant. What’s wrong with that?

The current plan is for parking rates at a particular time of day to be adjusted only monthly. This is a crude approximation of the actual volatility of demand, which reflects many factors other than time of day and day of week. In a complete free-market system, parking costs would change more dynamically based on actual utilization at the time.

But there’s a problem with pure dynamic charging, of course: the decision to use parking happens when we leave home in our car, so we really need to know then what the parking cost will be. The crude monthly adjustment system will ensure that you can always find that information online, but of course, you could adjust every two days and that would still be true.

I hope San Francisco will use their new occupancy data to figure out how to predict demand more precisely, incorporating variables other than time of day. In Hayes Valley, for example, street parking demand is almost certainly going to be affected by events in the nearby Opera House and Symphony Hall, as well as other smaller events. (Even if on-street parking limits are too short to use when attending the Opera, the parking garages that serve the Opera will be full, pushing others on-street who would otherwise park there.) Weather may play a factor, though that one may cut both ways. We’re more likely to make discretionary trips in sunny weather, but we’re more likely to choose driving over transit or cycling in cold and wet weather. It will be interesting to see how weather affects the utilization profiles that SF Park observes.

In a recent post on congestion, I observed that current road-pricing policy requires us to save money, a renewable resource, by expending time, the least renewable resource of all. If you’ve ever circled a block looking for parking, while missing or being late for something that’s important to you, you know that the same absurdity is true of our on-street parking policy. SF Park deserves close watching. If it doesn’t work well, ask yourself: “Is it because it doesn’t make sense to charging for parking based on demand, or is it because they were too timid to do it completely?” The answer will almost certainly be the latter. The policy itself relies only on free-market principles that already govern many parts of our economies, because they work.