Stormwater Utility Fees and Credits: A Funding Strategy for Sustainability

Jerry Zhirong Zhao, Camila Fonseca and Raihana Zeerak
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Jerry Zhirong Zhao: Humphrey School of Public Affairs- University of Minnesota, 301 19th Ave S, Minneapolis, MN 55455, USA
Camila Fonseca: Humphrey School of Public Affairs- University of Minnesota, 301 19th Ave S, Minneapolis, MN 55455, USA
Raihana Zeerak: Humphrey School of Public Affairs- University of Minnesota, 301 19th Ave S, Minneapolis, MN 55455, USA

Sustainability, 2019, vol. 11, issue 7, 1-15

Abstract: Lack of stable and dedicated funding has been a primary challenge for municipalities in the United States to implement effective stormwater management programs. Stormwater utility fees (SUFs), as user fees, are an alternative dedicated revenue source to fund stormwater management. When complemented with stormwater utility credits or discounts, SUFs provide greater flexibility to adopting best management practices and reducing stormwater runoff at a lower overall cost to the community. While SUFs have been increasingly used, there is little systematic research on this topic. This paper reviews literature on how SUFs work, discusses the mechanisms for setting the fees, and provides examples of different rate structures from across the U.S. Then, we use the findings of the literature to evaluate SUFs as a funding strategy for stormwater management based on four revenue evaluation criteria of efficiency, equity, revenue adequacy, and feasibility. Overall, the literature indicates that stormwater utility fees are a more efficient and environmentally sustainable source of revenue that allows for long-range planning of capital improvements and operations, but their high political visibility and legal obstacles can affect their effective implementation. However, more empirical research is needed to assess these propositions. There is a lack of literature on effective SUF designs, equitable fee types, the extent to which SUFs lead to change in public behavior and their impact on business and stormwater management investments in a municipality.

Keywords: stormwater management; stormwater finance; stormwater user fees; revenue evaluation; infrastructure finance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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