In most towns and cities, parking meters are considered the third rail of urban politics. Just the mention of meters and rate increases spawned recent protests in Chicago, Buenos Aires and Cape Verde, an island off the coast of Africa. Others have gone further: When Coogee, a resort town outside of Sydney, Australia, proposed installing meters, protesters tried to earn a spot in the Guinness World Records book by making the largest human-formed “NO” ever recorded. And when the town of Lewes, in East Sussex, England, installed meters in 2004, someone in the area responded by blowing up 14 meters, causing more than £20,000 worth of damage. As Donald Shoup, a professor of urban planning at the University of California, Los Angeles, and one of the leading thinkers on parking, puts it: “I think people use the reptilian cortex of the brain to think about parking. It’s the most primitive part of the brain, for making fight or flight decisions, and it deals with territorial decisions. Parking is a territorial issue.”

No one likes to pay for parking — even Shoup. But when cities don’t charge a reasonable rate at meters, we end up with more traffic on the road and fewer people shopping at neighborhood businesses.
Here’s why: Most towns and cities, when they install meters, charge the same amount for every neighborhood, no matter the time of day. That might seem fair at first glance, but it goes against the basic principle of supply and demand. While the supply always stays the same, different neighborhoods draw different numbers of people, and that demand changes by the time of day, day of week and by the month and season.
MORE: 9 Surprising Infrastructure Innovations Happening Right Here in America
And getting prices wrong causes major problems. If, for example, a city starts charging a high meter rate in a small shopping district that receives only a modest amount of traffic, many people will refuse to pay and just drive right past. As Shoup points out, that has major detrimental effects: “Businesses will lose customers, and drivers will not take advantage of spaces that are available.” Los Angeles recently experienced this exact problem. “When they doubled the price of parking in the city,” Shoup says, “you could see entire blocks that were empty.”
If, on the other hand, you charge a below-market rate for a popular district, you have the opposite problem — people will stay parked in the spots all day. Phil Lesser, a business owner in San Francisco’s popular Mission District and the vice president of government/media relations for the Mission Merchants Association, says his fellow business owners fear that exact problem: “Street parking has always been a key component of commercial corridors. If [customers] come down and can’t find a spot and leave, that doesn’t help the merchants.”
Beyond that, the cheap on-street prices means that drivers will just keep circling the block until a space becomes free, which not only contributes to pollution but also creates traffic problems: Studies have shown that as much as 30 percent of all traffic in downtown areas is caused by drivers hunting for parking spaces. That traffic is further exacerbated in the evenings, because parking is often free after 6 p.m. What happens when parking is free? Drivers start hunting for spaces at 5:30 and 5:45 p.m., circling the block in the middle of rush hour — making things particularly hellish for traffic-mired cities. Shoup and his students did a parking study in one small neighborhood in Los Angeles that found that the highest levels of space-hunting happened between 5 p.m. and 6 p.m. “The city’s parking policy was congesting traffic at the very time people wanted to drive home,” he says. “The city is telling you to idle in traffic at the very time people want to go home.”
The solution, argues Shoup, is a pretty simple one: Make prices for on-street parking dynamic, or more like the prices for hotels or flights. An area that sees a ton of interest — a popular shopping district during the afternoon, for example — would have higher meter rates than a quieter neighborhood. A few blocks away, on a quieter street, the rates would be cheaper, enticing people to the area. Those prices would fluctuate, depending on the time of day and the season of the year to ensure that a few parking spaces are always available.
ALSO: What’s the Country’s Best Smart-Growth Project? You’ll Be Surprised
In 2011, San Francisco implemented a dynamic-pricing pilot program in a few neighborhoods with the help of a $19.8 million federal grant. The program, which the city dubbed “SFpark,” installed smart meters that would change pricing for morning, afternoons and evenings, with the goal of trying to reach a target of having streets around 85 percent full. Today, if you want to park down by the popular Ferry Building on Saturday afternoon, you can expect to pony up $4.50 per hour. Willing to walk a few blocks? You might only pay $1.00 per hour.
Lesser of the Mission Merchants Association says that the business owners were initially “wary” of the plan, as were many people — San Francisco residents feared that the new rate system was an attempt to jack up rates and boost parking revenue. That hasn’t come to pass. Rates, which used to average $2.73 per hour across the city, now average only $2.41 — a drop of 12 percent. Depending on the neighborhood and time of day, the rate varies from $0.25 per hour  to $6.00 per hour. Every few weeks, the parking authority tweaks the rates to try to hit their targeted ratio. “After 13 rate changes, we’ve seen zero complaints,” says Jay Primus, manager of the program. “In a town like San Francisco, people would let us know [if they had complaints].”
Revenue from the parking meters is up slightly, but the new system — which makes it finally easy to find and pay for a space — has drastically cut down on parking tickets. “We dramatically reduced the number of parking tickets, which is great for our customers,” Primus says. “Anecdotally, what we’ve heard is that people are much happier because, finally, parking is easier to find and easier to pay for.” The shop owners, too, have welcomed the program. “Anything that will help people find parking and get them out of their cars — we’re all in favor of that,” says Lesser. “We’d like it if all our neighbors could live above us and walk or bike to us, but the automobile is still an integral part to people’s lives.”
Primus and SFpark are currently finalizing a report on the pilot program’s results, which will be released in June. While Primus is unable to reveal the data until then, he does tell me that San Francisco has become a popular stop for delegations from American and international cities struggling to manage their own parking. Los Angeles, Berkeley, Calif., and Seattle have started small pilots with the help of local and federal grants, while Rio de Janeiro — which is currently trying to clean up its infrastructure for the 2016 Olympic Games — sent representatives who were enthused by SFpark. “They made the pitch to the mayor [of Rio], and the mayor just loved it,” says Shoup, who also met with the Rio representatives. “They recommended 7,000 meters, and the mayor said no — 20,000. They just put out a request-for-proposal. A parking system would be a legacy of the Games.”
In the end, instituting a supply-and-demand system for parking might be the easiest and cheapest way to reduce traffic. “Every big city has parking,” Primus says, “and almost every city has parking management infrastructure — and changing how a city manages that system is a very powerful way to achieve their goals. It’s easy in a sense that it’s more policy- and technology-based, and not infrastructure. It’s cheaper than building a subway network.”
DON’T MISS: 6 Steps for Building Better Bike Infrastructure