The high cost of cheap permit parking in Amsterdam

This post updates my Jun 2022 post announcing the paper because I have extensively revised the paper (shortening, correcting, elaborating) before sending it out to a journal for review.

I don’t know when we will get news from the review process (somewhere between 1 day and 6 months), so here are the highlights:

1. We started the paper to see how bureaucratic prices for parking lined up (or not) with market prices for housing. Both prices should go up in “popular” neighborhoods. If they are misaligned, then opportunity costs for misallocation rise. To check alignment, we used GIS and ratios of parking prices to housing prices, which made it easy to compare areas across the city.
2. Our first pivot came when we realized that people park by the hour (tariff, for visitors) or year (permit, for residents), so we compared both.
3. Permit parking takes 80% of spaces to earn 20% of parking revenue. That’s because permits are inefficiently cheap, so bureaucrats increase tariffs (€7.50 per hour and rising) to try to squeeze out visitors. Here’s the imbalance:
4. Although I had heard of Amsterdam’s autoluw (“nearly car free”) policy, I did not know that it dates back to a 1992 referendum to remove cars from the city center. But, there are now more cars (and parking places) in the center than in 1992, so progress is slow.
5. According to our analysis of ratios, permit parking is too cheap everywhere, and tariff parking is too cheap in Noord, which will harm quality of life as that district develops. This map shows the ratio of tariff to living prices (Noord in red):
6. The city is not raising permit prices to reduce demand. Instead it is trying to build more supply — underground and underwater parking garages — for permit holders. Spaces in these garages cost €80,000-230,000 to build in our three examples, but the city isn’t even recovering its operating costs in permit revenue. So its spending €millions of citizens’ money on capital projects that will never earn their cost back.
7. We recommend increasing the price of permits from current (€500/year) levels to around €3500/year, which is what (other academics have estimated that) people are willing to pay.
8. Such an increase, over time, would reduce the number of cars by around 40 percent, freeing 50,000 spaces for other uses (and removing the need for costly garages). The extra revenue (around €300 per citizen per year) should be used to improve neighborhoods.

You can download the paper from here.

We are happy to hear your corrections and suggestions for improvement!