If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation rather than a matter of satisfying a legal requirement. Parking would be scarcer, and more likely to have a price — or a higher one than it does now — and people would be more careful about when and where they drove.
He couches it in terms of all of the mandated parking and subsidised parking that is providing freely alongside roads resulting in over-supply but actually, it is just a consequence of congestion and environmental concerns. Put simply, every time someone provides and prices a parking space, they are failing to take into account the externalities this causes. That is, parking is a complementary service to driving and so is underpriced. Each additional spot causes more driving and more congestion — neither cost is internalised by the parking provider. So this isn’t a regulatory thing as much as an overall environmental issue.
But is it as easy as putting a price on parking as Cowen advocates? I’m not sure. While San Francisco is moving in a good direction in terms of congestion pricing on meters, it strikes me that usage based pricing is a better way to go — that is, taxing petrol, road use or emissions. But I do wonder how the free parking issue interacts with such policies. Sorting that out will require a model; something I don’t have time to undertake in this post.