Abstract

Stormwater management (SWM) includes a wide range of services aimed at environmental protection, enhancement of water resources and flood control. Local governments are responsible for managing all these aspects within their jurisdiction, but they often present limitations in generating revenues. Thus, many municipalities have been seeking a dedicated funding source for these programs and practices. This publication provides a brief overview of current legal issues associated with stormwater funding focusing on the most used method: fees. It is a successful mechanism to fund legal obligations of municipalities; however, it must have a significant value to motivate the reduction of runoff. Through literature, we found stormwater fees in Australia, Brazil, Canada, Ecuador, France, Germany, Poland, South Africa and the United States (USA). France had the highest average monthly fee, but this financing experience was suspended in 2014. Brazil has the lowest fee by m², comparable to the US fee. While in Brazil overall SWM represents low priority investments, the USA represents one of the most evolved countries in stormwater funding practices. It was noticed by reviewing the international experience that charging stormwater fees is a successful mechanism to fund the legal obligations and environmental protection.

INTRODUCTION

Stormwater management (SWM) has evolved through time and it presents significant dissimilarities in developed and developing countries. Decades ago, in developed countries, the focus was on urban flood control, since problems related to water supply, sewage treatment and solid waste were controlled. Nowadays, SWM also includes environmental protection, enhancement of water resources and regulation (water quality and prevention of harm by floods). On the other hand, sanitation is still precarious in most of developing countries. As the management is at the stage of sewage treatment, the stormwater issue is considered low priority unless the municipality is reacting to a recent major storm event and flood.

Due the multiple challenges presented by increasingly more stringent and costly environmental regulations, an aging infrastructure, changing demographics, degraded rivers and streams, climate change and flood protection, many cities in the world have been facing complex problems not only on the provision of an affordable and safe drinking water supply but also the collection and treatment of wastewater and stormwater. Therefore, governments are looking for mechanisms to respond to the complex challenges regarding urban SWM.

Some countries are establishing stormwater programs to respond to these challenges. Local governments are responsible for managing all these aspects within their jurisdiction, but they have limitations in generated revenues. Public infrastructure requires expensive maintenance, repair and replacement to maintain service, in addition to the expansion of existing services to meet new demands. Thus, many municipalities have been seeking a dedicated source of funding for this programs and practices. The figure of stormwater utility (SWU) has become increasingly used and represents a growing trend in local governments. It is a special assessment district set up to generate funding specifically for SWM. Users within the district pay a stormwater fee and the revenue generated directly supports maintenance and upgrade of existing storm drain systems, development of drainage plans, flood control measures, water-quality programs, administrative costs and sometimes construction of major capital improvements.

Stormwater fees are important mechanisms to induce changes in users' behavior and therefore mitigate the negative environment externalities due to uncontrolled usage. The inhabitants are, at the same time, the client who is paying indirectly for the project, the user of the public infrastructure and the victim of urban floods and pollution (Chouli & Deutsch 2008). However, a stormwater fee implementation is not a consensus. In Brazil, for example, just one out of 5,570 municipalities implemented a stormwater fee in 1998, but some years later it was legally contested and suspended (Tasca 2016). In France, the experience on stormwater fee ended in 2014 by the central government (Legifrance 2014) and this action was hardly contested by technical and research sectors. In the United States (USA), 25% of SWUs were contested in 1998 (Doll et al. 1998), decreasing to only 5.4% in 2013 (Campbell 2013). One measure to curb public opposition to the new fee is to offer discounts or credits for onsite SWM implementation (Doll et al. 1998). Such an approach complements and encourages the growing trend in SWM towards widely dispersed, decentralized installation of stormwater control measures to reduce excess stormwater flow in the combined sewer or in the green infrastructure (Kertesz et al. 2014).

Regardless the stormwater charging mechanism, its implementation requires technical, political and legal effort. Deep studies are needed and the participation of all actors involved is vital. It could avoid general public thinking that the taxation is one more attempt by local governments to take money from citizens, a ‘rain tax’ (Campbell 2013).

It is noticed by the international experience that charging stormwater fees is a successful mechanism to fund their legal obligations and environmental protection, leading to control the impacts due to urbanization. However, this discussion is still incipient in developing countries. Therefore, to contribute to this discussion, this paper systematically reviews the data for funding mechanisms for SWM focusing on stormwater user fees charged in different countries.

MATERIAL AND METHODS

Research was conducted on papers and technical manuals/reports. Our primary method of identification was through internet search on traditional databases (Web of Science, Science Direct/Elsevier, Springer, EBSCO host and Wiley Online Library). Additionally, a search was carried out in an open database (Google Scholar), which provides access to several types of documents, as peer-reviewed papers, theses, books, abstracts, and articles from academic publishers' sites, professional societies, preprint repositories, universities and other scholarly organizations. At the first step, key words were defined based on the question: ‘What mechanisms can finance SWM?’ Key terms used were (with the Boolean operator AND in each term): stormwater charges, stormwater financing, stormwater funding, stormwater levies, stormwater tariffs, SWU, stormwater pricing, stormwater tax and stormwater taxation.

At the second step, the questions were: ‘What is the fee value in different countries?’, ‘What services do these fees cover?’ and ‘What are their peculiarities?’ These questions generated the key words: drainage fee, rain tax, stormwater fee and SWU fee. In both steps, these words were searched in abstract, title or key word, except in the open database, which was searched only in the title in order to reduce the results. The answers to these questions were supplemented by stormwater utilities web pages (Figure 1). All papers found were assessed and excluded those that did not refer to the thematic.

Figure 1

Guiding research questions and methodology.

Figure 1

Guiding research questions and methodology.

For comparison of different fees, the monetary unit considered was the American dollar (US$). The official exchange rate of World Bank for the year in which the survey was published was used as reference.

RESULTS AND DISCUSSION

Table 1 presents the results of the survey conducted in the databases. There are few scientific papers about the funding of SWM or its variants. Google Scholar is the database that indexes a larger number of results among the scientific databases studied. This occurred because its database is larger and its interface does not allow a variety of advanced features, providing more results that are general. On the other hand, there are numerous technical manuals/reports in utilities web pages or news pages. We believe that this issue has been receiving more attention from service providers, since SWM has been experienced in developed countries for more than 30 years (Ellis 1995).

Table 1

Bibliometric analysis of scientific research

Step Key words Web of Science Science Direct (Elsevier) Springer EBSCO host Wiley Online Library Google Scholar 
Stormwater charges 
Stormwater financing 10 
Stormwater funding 
Stormwater levies 
Stormwater tariffs 
Stormwater utility 10 13 41 
Stormwater pricing 
Stormwater tax 
stormwater taxation 
Drainage fee 
Rain tax 
Stormwater fee 13 
Stormwater utility fee 
Step Key words Web of Science Science Direct (Elsevier) Springer EBSCO host Wiley Online Library Google Scholar 
Stormwater charges 
Stormwater financing 10 
Stormwater funding 
Stormwater levies 
Stormwater tariffs 
Stormwater utility 10 13 41 
Stormwater pricing 
Stormwater tax 
stormwater taxation 
Drainage fee 
Rain tax 
Stormwater fee 13 
Stormwater utility fee 

Typically, SWM information is limited to conference proceedings and grey literature (Marsalek & Chocat 2002). Therefore, it appears to be a more technical than discussion issue in the developed countries. However, in some developing countries such as Brazil and South Africa, discussions on SWM have been starting on the academic field.

Financing SWM

Some economic mechanisms can finance SWM, such as market-based, incentives, rebate and tradable allowances instruments (Parikh et al. 2005; Thurston 2006). These instruments have been suggested as plausible approaches to the reduction of stormwater runoff and as an incentive to individuals to identify and adopt lower cost control technologies.

The Pigouvian tax concept indicates that optimal tax on pollution should be a direct tax that equals the marginal external damages caused by the pollution (Pigou 1962). However, directly taxing pollution can be hard, especially when monitoring is difficult, and so the policy maker can exploit a relationship between the Pigouvian tax has with income tax and rebates on sustainable products (Thurston 2006). For example, a Pigouvian tax or an allowance market can be used to allocate the abatement burden among sources to achieve the lowest overall control costs A Pigouvian tax is collected by a regulatory agent and that is charged on each unit of runoff from an individual's parcel. On the other hand, an allowance market is a quantity-based instrument that restricts acceptable levels of runoff, because the total number of allowances issued must be equal to the total allowable level of runoff for the watershed. This permits the transfer of these allowances through free trade, that is, buying and selling allowances within the market (Parikh et al. 2005).

The charge (a fee or tax) on the amount of stormwater runoff that a parcel generates is placed by price instruments and provides some incentive to decrease runoff, leading to the point where the marginal control cost equals the runoff charge. In general, there are no specific purposes to the tax revenue and they must be applied uniformly to all taxpayers, which means they are not related to specific applications (Parikh et al. 2005). Fees must be fair, equitable, and based on the cost of the service provided as measured directly or by some approximation of use or benefit, to be constitutionally valid. The implementation requires technical, political and legal effort. For these reasons, the adoption of a fee is becoming more popular and it has become an important method for obtaining revenue.

Unlike water and wastewater fees, a stormwater fee can be reduced by stormwater credits. Property owners who install best management practices (BMPs), such as rain gardens, rain barrels, detention ponds, bioswales, green roofs, constructed wetlands, and other options, may qualify for long-term or permanent reductions in their stormwater fees. These features can either or both reduce the amount of stormwater runoff leaving the property and treat the runoff to improve water quality. However, it is complex for a utility to predict what combination of revenue and BMP implementation will result from a fee and credit system.

Besides that, fees and credits are very small, which motivates only the most egregious producers of runoff to take action, while for the typical single family households it does not appear to be an advantageous alternative (Doll et al. 1998). Therefore, the cost alone may not be an ideal mechanism to drive adoption of stormwater BMPs and many local government and SWU programs are subsidizing or paying completely for the installation of BMPs on residential property (Youngerman 2013). Doll et al. (1998) argues that there is no clear consensus in the choice of a market-based approach to control stormwater runoff. The selection is dependent upon the unique physical characteristics of the watershed, as well as the existing legal structure, and social institutions of the community.

Financial mechanisms used for stormwater programs on the international scene are shown in Table 2. There are many options available and the communities can use a combination of methods to fund different programs and cost centers. The legality of a specific financing mechanism will depend upon national or state law. It is important to highlight that some mechanisms are not related to the direct consumption of the service. They are related to raising revenue and are not tied to SWM.

Table 2

Financial mechanisms of stormwater funding

Mechanisms of stormwater funding Description 
Bonding for capital improvements Bonds are sometimes used to fund operations as well as capital improvements (it is not generally viewed as prudent). Some SWM costs can be viewed either as a capital or as operating expense. 
Capitalization recovery fees These fees are most often intended to recover a fair share of the prior public investment in infrastructure capacity installed to accommodate future development. The fees are applied to developers who make use of that provisional capacity when they develop projects. 
Developer extension/latecomer fees They are not a revenue mechanism, but rather a means of apportioning capital costs among several properties as they are developed. New customers buy an existing infrastructure, and/or the infrastructure expansion necessary to serve them and pay the initial developer. Such can be adopted as part of a comprehensive stormwater user fee rate structure or negotiated on a case by case basis. 
Federal and state funding opportunities (grants, loans, and cooperative programs) There are many forms in this funding, including technical support, facility construction, cooperative programs, and grants and loans for various purposes. They could be a good source of funding, but they are not enough to fully sustain an ongoing SWM program. 
General fund/General tax revenues A method of using a percentage of money from a general pool of money. It accounts for everything not accounted for in other funds. Stormwater costs are spread across taxpayers without regard to individual benefit. 
Impact fees They are based on the cost of mitigating development impacts of individual developments by building public off-site improvements where impacts cannot be solved on-site. 
In-lieu of construction fees It is one type of mitigation used to compensate for unavoidable impacts on what a user pays a fee instead of construction some stormwater works. 
Public private partnerships (PPPs) The major interest by governments in PPPs as a mechanism includes their capacity to improve service delivery – that is, to create better value for money. The core sources of efficiency are suggested to be competition, incentive, governance, risk assignment and improved management. A significant limitation of PPPs for stormwater is that the scale of investment is unlikely to be sufficient to interest the major players. 
Plan review, development inspection, and special user fees A variety of special user fees could be included under the scope of a SWU or adopted separately to support regulatory measures because regulatory activities are associated with protecting the public health, safety and welfare. 
Property taxes The funding is released through property taxes paid. As the general funds, SWM competes with other sectors. This system is not equitable, because the basis for determining property taxes is irrelevant to the cost of SWM for that property. 
Special assessments This method is predicated on apportioning costs in proportion to the direct and special benefits individually derived by specific properties. They are not widely used as a primary funding mechanism for SWM. 
Stormwater user (service) fees Under this system, property owners may be charged a fee based on their contribution to stormwater system. 
Mechanisms of stormwater funding Description 
Bonding for capital improvements Bonds are sometimes used to fund operations as well as capital improvements (it is not generally viewed as prudent). Some SWM costs can be viewed either as a capital or as operating expense. 
Capitalization recovery fees These fees are most often intended to recover a fair share of the prior public investment in infrastructure capacity installed to accommodate future development. The fees are applied to developers who make use of that provisional capacity when they develop projects. 
Developer extension/latecomer fees They are not a revenue mechanism, but rather a means of apportioning capital costs among several properties as they are developed. New customers buy an existing infrastructure, and/or the infrastructure expansion necessary to serve them and pay the initial developer. Such can be adopted as part of a comprehensive stormwater user fee rate structure or negotiated on a case by case basis. 
Federal and state funding opportunities (grants, loans, and cooperative programs) There are many forms in this funding, including technical support, facility construction, cooperative programs, and grants and loans for various purposes. They could be a good source of funding, but they are not enough to fully sustain an ongoing SWM program. 
General fund/General tax revenues A method of using a percentage of money from a general pool of money. It accounts for everything not accounted for in other funds. Stormwater costs are spread across taxpayers without regard to individual benefit. 
Impact fees They are based on the cost of mitigating development impacts of individual developments by building public off-site improvements where impacts cannot be solved on-site. 
In-lieu of construction fees It is one type of mitigation used to compensate for unavoidable impacts on what a user pays a fee instead of construction some stormwater works. 
Public private partnerships (PPPs) The major interest by governments in PPPs as a mechanism includes their capacity to improve service delivery – that is, to create better value for money. The core sources of efficiency are suggested to be competition, incentive, governance, risk assignment and improved management. A significant limitation of PPPs for stormwater is that the scale of investment is unlikely to be sufficient to interest the major players. 
Plan review, development inspection, and special user fees A variety of special user fees could be included under the scope of a SWU or adopted separately to support regulatory measures because regulatory activities are associated with protecting the public health, safety and welfare. 
Property taxes The funding is released through property taxes paid. As the general funds, SWM competes with other sectors. This system is not equitable, because the basis for determining property taxes is irrelevant to the cost of SWM for that property. 
Special assessments This method is predicated on apportioning costs in proportion to the direct and special benefits individually derived by specific properties. They are not widely used as a primary funding mechanism for SWM. 
Stormwater user (service) fees Under this system, property owners may be charged a fee based on their contribution to stormwater system. 

The two most common funding options are general fund and stormwater user fees (Grigg 2012; EFC 2014). The first method is challenging for several reasons, which includes it is not linked to financial obligation with services received and may reduce the ability of a municipality to adequately plan and meet basic SWM obligations. Moreover, stormwater programs competes with other sectors without funding and investment and it relies on government priorities. SWM improvements are typically considered low priority unless the municipality is reacting to a recent major storm or regulatory action (EPA 2008a). Another problematic reason refers to the responsibilities of SWM, which tend to be distributed in the work responsibilities of existing and multiple departments (public works, planning, water resources, environment, etc.) in programs financed by general tax revenue (NRC 2009). Stormwater quality management is often not regarded as a municipal service, unlike flood control or wastewater conveyance and treatment (EPA 2008b). This method suffers from the fact that as SWM systems age, they require more maintenance and resources, which may not be available in a tough competition with other water services, including water supply and wastewater management (Marsalek & Chocat 2002).

In contrast, many communities are creating SWUs to provide dedicated funding through stormwater user fees. They have discovered that user fee financing can provide a source of funding that is equitable (i.e. charges are commensurate with costs of service), dedicated exclusively to SWM needs, dependable (i.e. not subject to significant fluctuation) and adequate to meet budgeted financial needs (Benson 2002). The services focus on specific missions and should be self-supporting from revenues (Grigg 2012) and all properties within the corporate city's limits will pay the SWU fee, including real estate exemption from taxes.

However, this funding method has also presented some problems. Stormwater and flood control services operate at the interface between water management, emergency management, pollution control, and land-use management. Stormwater is increasingly located with water and wastewater services as an integrated utility. While these services are related, their disparate nature makes cities often find it difficult to develop and finance full-featured stormwater programs (Grigg 2012). It is complex to identify exactly who pays and who benefits for each project because drainage systems are interconnected and there is difficulty in separate general and specific benefits of stormwater facilities (Grigg 2011). Some states' courts have declared the benefit needs to be direct, because a fee is not designed to confer benefits on the general public, but rather to benefit the particular person on whom it is imposed. In reply, most utilities justify the benefit as a general watershed benefit – all those within a given watershed benefit from adequate SWM (NACWA 2016).

This situation gets more complicated in older cities that have combined (conventional) sewer systems. On systems like this, stormwater and wastewaters are collected and conveyed to a wastewater treatment plant for treatment prior to being released into a surface waterway. However, the combined water can exceed the carrying capacity from systems during intense rainfall events. Apart from causing flooding and consequently hazardous situations to pedestrian and road traffic, it results in water quality problems and risks to aquatic species and public health. Combined sewer systems make it difficult to identify the distinct services, making the measurement and financing of stormwater services a complex task (Grigg 2011), as well the support of the goals for sustainability and public health and safety. Currently, the modern SWM systems separate rainwater from the sewage system, which provide a higher level of service. This measure has plenty of benefits, such as elimination of combined sewer overflow, and prevent pollution. Moreover, it allows stormwater to be used as a resource and it optimizes performance of the waste water treatment plant.

Marsalek & Chocat (2002) cited that SWM evolution as a specific service led to some changes in the SWM economy and financing. The large number of elements included in modern SWM systems, such as BMPs, create totally different requirements with respect to their operation, economy and financing. To provide incentives for the adoption of on-site source reduction BMPs, many stormwater utilities offer credits or fee reductions for owners who implement BMPs within yours parcel. Therefore, the SWM systems contribute significantly to the local economy, by maintaining or improving beneficial uses of receiving waters, reducing harmful impacts and associated damages (particularly flooding). It also enhances real estate values in well-designed areas as well as leads to the development of a new segment of the environmental technology industry, which sell SWM devices and the maintenance of these goods (Marsalek & Chocat 2002).

Stormwater fee structure

Fee methodology draws upon key concepts from public finance, utility theory, economics, law and engineering science to develop a rational, carefully structured, broadly encompassing rate theory for stormwater user-charges, around which defensible fee structures of many forms may be crafted (Duncan 2001). These concepts were not addressed in this research, but we emphasize that stormwater fee structure has a clear relationship between customers' service demand and their charge. In each locality, the process for codifying a stormwater fee varies based on their own laws.

User fee may be generalized into two major categories: stormwater fees and stormwater utilities. Stormwater fee programs charge consumers a flat rate for the use of the municipal stormwater conveyance system and SWM services, while SWU programs charge a variable rate based on the consumer's usage of these services as depicted in Figure 2. Flat fee uses a single rate or tiers, while the SWU funding mechanism can be further divided based on the method employed for the determination of usage (Kea et al. 2016). The most common methods for determining stormwater fees are listed in Table 3.

Table 3

Methods for determining stormwater fees

Methods Definition Advantages (A) and Disadvantages (D) 
Development intensity (ID) The fee is based on the percentage of impervious area related to the lot size. Similar to the REF method. All the parcels/categories are charged as a function of their development intensity in the area (empty, low developed, moderate, high and very high). A- It counts the permeable area's runoff, which means it is equitable. Furthermore, for any increase in the impermeable area, there is no change at the ID classification, which allows the registrations to be kept updated for a longer time. It is not necessary to update the registrations due to small changes. 
D- Lots are inserted into ID wide categories and not charged directly proportional to stormwater runoff. There may be complications when implementing this method, since the permeable and impermeable parcels need to be reviewed. It is also complex for the users' understanding. 
Distributed alternative transportation (DAT) This method considers the municipal roads runoff management and calculates the approximate cost based on the average trip length of a specific user. This component is added to the residential stormwater fee. A- It adds the management of municipal roads by the users. The responsibility for the impact on runoff is shared among the contributors. 
D- This is a very detailed and complex approach. It is not possible to charge the users who pass by the roads, only the contributors. 
Equivalent residential unity (ERU)/ also known as
equivalent stormwater unity (ESU). 
An ERU is the average impervious area on all single-family residential parcels within the territory of a given city. Fees for non-residential properties are proportional to the ratio of the parcel impervious area to the ERU. A- The relationship between impermeable areas and their impact on stormwater is relatively easy for the public understanding (‘you pay for what you turn impermeable). The number of billable units can be defined by taking in account only the impermeable areas, which saves work time. In general, they are considered fair. 
D- The potential impact of stormwater runoff of permeable areas is not counted. For that, the system expenses are recuperated from a small area base (impermeable). It is necessary a update for the construction of new areas. 
Equivalent hydraulic area (EHA) The lots are charged according to the combined impact of permeable and impermeable areas on the generated runoff. The fee is a combination of these factors and the impermeable private parcels. A- Equitable method because it counts permeable and impermeable parcels, including empty lots. 
D- It requires time to define the number of total billable unites. Also complex for users understanding. 
Hydrological alternative (AH) It is based on the property characteristics: soil type, topography, impermeable area, canopy trees and land use. A-It is found as a fair fee. 
D- Detailed and complex approach that requires detailed information of each lot. 
Residential equivalent factor (REF) This index counts the runoff generated by different lands use and occupation. One unit represents the runoff amount of a single family property for a specific storm event. A- It includes hydrological process, such as interception storage and the runoff of permeable areas. 
D- The rainwater amount is chosen arbitrarily in many utilities. 
Total property area (TPA) The fee is charged on the total area of the property. A- Simple calculation. 
D- Less sophisticated and fair compared to the other approaches. 
Flat fee A flat fee to users of a stormwater conveyance system is charged. A- Simple calculation. 
D- Does not individualize the impact of each contributor. 
Tier system It charges a single fee where consumers are categorized based on a select variable and charged accordingly. A- There is a charge for each tier. This can simplify charging. 
D- For multi-residential and non-residential, the total hard surface area of each property is individually assessed. It can be a laborious method. 
Methods Definition Advantages (A) and Disadvantages (D) 
Development intensity (ID) The fee is based on the percentage of impervious area related to the lot size. Similar to the REF method. All the parcels/categories are charged as a function of their development intensity in the area (empty, low developed, moderate, high and very high). A- It counts the permeable area's runoff, which means it is equitable. Furthermore, for any increase in the impermeable area, there is no change at the ID classification, which allows the registrations to be kept updated for a longer time. It is not necessary to update the registrations due to small changes. 
D- Lots are inserted into ID wide categories and not charged directly proportional to stormwater runoff. There may be complications when implementing this method, since the permeable and impermeable parcels need to be reviewed. It is also complex for the users' understanding. 
Distributed alternative transportation (DAT) This method considers the municipal roads runoff management and calculates the approximate cost based on the average trip length of a specific user. This component is added to the residential stormwater fee. A- It adds the management of municipal roads by the users. The responsibility for the impact on runoff is shared among the contributors. 
D- This is a very detailed and complex approach. It is not possible to charge the users who pass by the roads, only the contributors. 
Equivalent residential unity (ERU)/ also known as
equivalent stormwater unity (ESU). 
An ERU is the average impervious area on all single-family residential parcels within the territory of a given city. Fees for non-residential properties are proportional to the ratio of the parcel impervious area to the ERU. A- The relationship between impermeable areas and their impact on stormwater is relatively easy for the public understanding (‘you pay for what you turn impermeable). The number of billable units can be defined by taking in account only the impermeable areas, which saves work time. In general, they are considered fair. 
D- The potential impact of stormwater runoff of permeable areas is not counted. For that, the system expenses are recuperated from a small area base (impermeable). It is necessary a update for the construction of new areas. 
Equivalent hydraulic area (EHA) The lots are charged according to the combined impact of permeable and impermeable areas on the generated runoff. The fee is a combination of these factors and the impermeable private parcels. A- Equitable method because it counts permeable and impermeable parcels, including empty lots. 
D- It requires time to define the number of total billable unites. Also complex for users understanding. 
Hydrological alternative (AH) It is based on the property characteristics: soil type, topography, impermeable area, canopy trees and land use. A-It is found as a fair fee. 
D- Detailed and complex approach that requires detailed information of each lot. 
Residential equivalent factor (REF) This index counts the runoff generated by different lands use and occupation. One unit represents the runoff amount of a single family property for a specific storm event. A- It includes hydrological process, such as interception storage and the runoff of permeable areas. 
D- The rainwater amount is chosen arbitrarily in many utilities. 
Total property area (TPA) The fee is charged on the total area of the property. A- Simple calculation. 
D- Less sophisticated and fair compared to the other approaches. 
Flat fee A flat fee to users of a stormwater conveyance system is charged. A- Simple calculation. 
D- Does not individualize the impact of each contributor. 
Tier system It charges a single fee where consumers are categorized based on a select variable and charged accordingly. A- There is a charge for each tier. This can simplify charging. 
D- For multi-residential and non-residential, the total hard surface area of each property is individually assessed. It can be a laborious method. 
Figure 2

User fee-funded stormwater program methods diagram. Source: Modification of Kea et al. (2016).

Figure 2

User fee-funded stormwater program methods diagram. Source: Modification of Kea et al. (2016).

The two most common methods are parcel-based or flat fee (Sharples 2007). The parcel-based fee reflects the amount of stormwater runoff disposed from property to the public network (user pay) and although it can acquire many forms, as shown in Table 3, it is often defined by the impervious area (e.g. rooftops, sidewalks and driveways). On the other hand, the flat fee charges an equal value for all homeowners regardless the property characteristics and how much they contribute to the runoff (Sharples 2007). Thus, a flat fee may seem unfair.

The results of the research through media on stormwater financing presented stormwater fees in Australia, Canada, Ecuador, France, Germany, Poland and the USA. There are hypothetical case studies in stormwater fees in South Africa and Brazil to support their financing. There are also mentions of fees in other countries, such as Denmark, England, Wales, Sweden and Switzerland, but we did not find details. Following is the panorama of stormwater fee is described in those countries whose survey found sufficient detail for comparison.

Australia

Coombes (2015) describes the beginning of SWM in Australia in which stormwater drainage evolved from combined sewers that rapidly discharged the accumulated waste (rubbish, sewage, sullage and stormwater) from streets to waterways. This caused impacts on waterways, filling of swamps and development of contributing catchments to accommodate population growth resulting in frequent flooding. Therefore, separation of sewage and stormwater infrastructure and drainage solutions emerged to avoid it. SWM further evolved from the 1990s to include protection of waterways, mitigation of urban stormwater quality, Water Sensitive Urban Design (WSUD) and Integrated Water Cycle Management (IWCM) approaches. These approaches have wide adoption and support in legislation and policies nationwide (EA 2006).

Recent droughts have also brought changes in the urban water sector. Southeast Queensland (SEQ), the fastest growing region in Australia, has experienced the worst drought in recorded history (Spiller 2008) and the water conservation, harvesting, recycling and reuse stormwater have been considered in the SWM. Consequently, SWM includes water supply and it is based on retention and conveyance of stormwater runoff to meet multi-purpose design objectives (ARR 2015). Despite significant advances, SWM approaches implementation has been limited. Brown (2005) relates this problem to broader institutional impediments that are beyond the current concerns of consolidating technological and planning process expertise. This paper indicates that is necessary an institutional reform to improve SWU in this country.

SWM is responsibility of the state and local government, but there is little incentive to water utilities to develop water resource management strategies with them. Furthermore, local governments have limited resources and jurisdictional role about SWM. One of the main impediments to sustainable SWM is the lack of sufficient funding and effective market incentives. To address this, the government has been studying financial incentives, for example, offering subsidies or reducing stormwater fees (Roy et al. 2008). Despite Australia be cited in many literatures as a SWM example, few direct mentions of stormwater fee were found. Australian Environment and Communications References Committee recommend that the Government should restore funding for stormwater research, since revenues collected from stormwater tariffs are not used only for SWM (Australia 2015).

Fees were observed in two locations. Logan city council adopted a charge for the stormwater network for a charge area ($/dwelling), containing various charge category (residential or accommodation based on amount of bedroom dwelling). There are serious penalties applicable where practicable measures have not been taken to minimize contaminants from entering waters or a roadside gutter. These include fines ranging from $1,100 (US$814.92) up $5,500 (US$4,074.61), for individuals and corporations, respectively, as well prosecution and court penalties (LCC 2017). In Melbourne there is charged a flat fee for residents who are in one of our stormwater drainage areas. The quarterly fee is $19.10 (US$14.15) for who lives in a house and $5.98 (US$4.43) for who live in a unit or low impact (Sydney Water 2017). In addition, there are discounts for those who perform on-site detention stormwater.

Brazil

In Brazil, there is no stormwater financing, despite the occurrence of floods in many cities. As the sanitation management is at the stage of sewage treatment, the stormwater issue is considered low priority. Although it is recognized as a vast country in water resources, only 141 Brazilian municipalities (2.53%) have an SWM Master Plan (Tasca 2016). Santo André City, in São Paulo State, was the only municipality to implement a stormwater fee, in 1998, which was suspended in 2012 for being considered illegal.

On the academic field, there are four hypothetical case studies for stormwater financing (Tucci 2002; Cançado et al. 2005; Gomes et al. 2008; Tasca 2016). All fees consider impermeable areas and two of them also consider permeable areas. The work of Tasca (2016) used an adaptation to the ERU method. The average monthly residential family fee varied from R$3.56–R$18.68 (US$1.34–US$7.28) per residential unit and the average impervious area was 288.10 m². The fees can only cover the indirect costs of stormwater: operation and maintenance. It occurs for legal reasons, since investment costs cannot be included in the charge.

Canada

From 1999, many cities in Canada started to discuss about mechanisms of financing SWM, nevertheless, a few of them adopted effectively a stormwater fee. Regina, a city located in Saskatchewan, was the first one in the country to implement a fee, started in 2001 (Cameron et al. 1999). In 2012, there were 17 SWUs (AECOM 2013), followed by an increase of 21 in 2016 (Campbell et al. 2016).

In general, it was identified two types of taxes. The first one, flat fee, distributes the totals costs of SWM per land use or zoning, while the parcel-based based fee counts the impervious areas of each property. Fees ranged from US$2.78 to US$19.00. Only three communities use the ERU system, which has an average ERU in 174.66 m² and an average fee of 4.99/m² per month.

In Victoria Community, located in British Columbia, it was recently discussed the integration of both SWM and street sweeping fee (usually included in the property taxes). In Prince George City, there is the peculiarity of the snow management together to stormwater programs. It is because the melting snow affects the stormwater infrastructure.

Ecuador

There is a stormwater surcharge in Guayaquil, the largest city in Ecuador, reported by Mejía et al. (2015). The calculation is based on the measured consumption of drinking water, which means there is no direct relationship to the provision of the stormwater services. The average monthly fee varied from US$0.25–US$120.00, to 1–15 m³ and larger than 5,001 m³ of water consumption, respectively.

France

In France, the idealization of stormwater fee started during the formulation of the Water Law in 1992. Unsuccessful in this period, the government proposed it again in 2005, supported by the Grenelle II law, which discussed the national commitment for the environment associated to an annual fee: the urban stormwater tax (Nouveau et al. 2013). The law aimed to avoid flooding and pollution carried to water bodies, as well as to solve the issues regarding SWM financing. As an optional implementation, the fee should deal with the double dividends of environmental fees, which are the encouragement of an environmentally adequate posture of the payers and the generation of incomes to meet the financing difficulties (Chiroleu-Assouline 2001). The creation of the tax raised fears in the political environment, since the introduction of a new tax followed by electoral sanctions during the municipal elections period could threat the economic attractiveness of the territory (Nouveau et al. 2013). Therefore, the collection of the SWM fee in France was abolished at the end of 2014, by the law no. 1654/2014.

The fee was related to the impervious area of the property, which should be informed in a registration form by the owner. The value was set by the deliberative assembly of the municipality or another competent group and should not exceeding the limit of €1 per m² (Carron & Guénégou 2013). The complexity of the theme and control polices associated to initial cost and novelty of the instrument, are the reasons why only four communes (out of more than 36,000) have introduced the fee: Douaisis, Prévessin-Moëns, Sauzé-Vaussais and Syage (Nouveau et al. 2013). The fees ranged from 0€–360€ (US$0.0–US$478.09), and the average monthly fee was US$134.46.

Germany

Stormwater runoff is defined as wastewater, according to the German Federal Water Act, which implemented the European Union Water Framework Directive in 2000. This act aims to achieve good qualitative and quantitative status of all water bodies. However, many municipalities have a stormwater fee since the 1980s (Tabuchi 2002). Fees for the collection of stormwater via stormwater sewer systems in most states are calculated based on the size of the built up area from which the water drains into the stormwater sewer system (Burszta-Adamiak 2014). Oelmann et al. (2014) and Bertram et al. (2017) describe stormwater fee values of some large cities, such as Berlin, Hamburg, Munich, Cologne, Stuttgart and Dusseldorf. It is possible to estimate an average fee as 1.31 €/m² (US$1.50/m²).

More recently, Hamburg City created the ‘Rain InfraStructure Adaption (RISA)’, a project developed for 6 years (2009–2015). RISA was set up to adequately react to intensifying conflicts in the context of the urban development and to deficiencies in the framework of wastewater management. It approaches a new funding mechanism for SWM introducing a separated SWM charge in 2012. This charge is calculated by the overall annual costs for stormwater in correlation to the total sealed area in Hamburg connected to the public sewer system for stormwater. It currently amounts to 0.73 €/m² sealed area per year and must be paid for every sewer connected to the property (Bertram et al. 2017).

Poland

In Poland, the introduction of stormwater fee generated many protests among society. This occurred due the misunderstanding that stemmed from inconsistent legislation and the fact that the information campaign for residents was neglected. These fees have generated a great deal of controversy, both in legal and social terms (Burszta-Adamiak 2014). In 2003, Pila city was the pioneer at introducing a stormwater fee, an example followed by other cities (Ostrow Wielkopolski, Nysa, Bielsko-Biala, Poznan, Biala Podlaska and Boleslawiec). The purpose was to encourage users to manage water rationally and limit pollution load, as well as to cover the costs associated to the drainage and the construction of facilities for the stormwater and snowmelted treatment (Burszta-Adamiak 2014).

In 2006, the tariff decree that determines the methods of calculating stormwater and snowmelted discharge in Poland came into effect. The fee obligates the service recipient to pay the water and sewage company for the collected stormwater and snowmelt and it is expressed in monetary units. It can be calculated for 1 m3 of discharged wastewater or for a measurement unit of contaminated impervious surfaces, which generates the rainwater and snowmelt collected via the drainage system. In areas covered by a sewage-combined system, the fee represents the costs of sewage collection (m³). On the other hand, in areas of separate network for stormwater and snowmelt discharge into the sewer system, the fee is based on the volume of collected surface water or as function of the contaminated impervious surface (Burszta-Adamiak 2014). The latter type of monthly fee ranged from 0.31–7.06 PLN/m² (US$0.09–US$2.24).

South Africa

The SWM in South Africa is similar to Brazil. In these countries, the SWM is carried out directly by municipalities, which presents many budget constraints and no stormwater planning. Due to the low water quality in urban areas, strategies have been discussed to monitor and manage the pollution carried by stormwater runoff. In this country, the citizens pay for the potable water and basic sanitation, but not for stormwater, which is financed by the municipal fees. As a result, stormwater has a lack of financial resources, and by competing with other priorities, ends up receiving no investments. Therefore, this scenario requires alternative ways of financing (Fisher-Jeffes & Armitage 2013).

Fisher-Jeffes & Armitage (2013) studied the development of a stormwater fee using the Damage Avoidance Cost method. This method represents the initial environmental costs of a stormwater system operation, which means the total life-cycle cost of treating stormwater to acceptable standards. In addition, the method presupposes the costs of constructing virtual treatment works, which are non-existing works used only as a mechanism to estimate costs. However, the tool does not include the costs associated to the installation and maintenance of the stormwater network. The fee is a sum of the land acquisition costs for the treatment plant and the costs of stormwater treatment and plant maintenance.

The method was simulated in three municipalities of South Africa (Cape Town, Tshwane and Ethekwini) and taken in account the residential lots containing 160 m2 of impervious areas. The land acquisition had a significant variation within the same city, which influenced the difference between the results. The total monthly rate varied from 58ZAR–91 ZAR (US$7.92–US$12.43) per residential unit.

United States

The USA is the most evolved country in stormwater funding mechanisms. The knowledge base of stormwater finance started in the late 1970s, after the Clean Water Act (CWA) was created in 1972. It establishes the basic structure for regulating stormwater discharges (storm water runoff, snow melt runoff, and surface runoff and drainage) into water bodies and quality standards for surface waters (EPA 2008a) through the National Pollutant Discharge Elimination System (NPDS). An NPDES gives license for a facility to discharge a specified amount of a pollutant into a receiving water under certain conditions, as well as authorizing facilities to process, incinerate, landfill, or beneficially use sewage sludge. NPDES Stormwater Program includes discharges from construction and industrial activities, municipal sources, transportation sources, oil and gas stormwater permitting, EPA's Residual Designation Authority, stormwater maintenance and long-term stormwater planning (EPA 2017). The permitting authority identifies significant violations, as direct discharge, discharges of oil or hazardous substances and false statements it authorizes the Agency to take civil or criminal action. Penalties vary according to gravity and if it is a negligent or knowing violation.

As this law does not provide any budget allocation to administer the permit program, cities have been developing fees for public stormwater services as a reasonable and effective mechanism to fund their legal obligations. The NPDES program has grown significantly since then. In the 1980s and 1990s, organizational and finance issues of stormwater programs began to appear in magazines and conference proceedings. Beginning in the 1990s, a few surveys and case studies of SWUs were published (Grigg 2012). In 2016, Campbell et al. (2016) identified almost 1600 of them located in 39 states and the District of Columbia. However, they estimated this number between 2000 and 2500 SWUs. It reflects stormwater needs and local political reality and it demonstrates the importance given to the stormwater issue in the USA. However, EPA (2008b) cites that stormwater programs appear underfunded when compared to other types of water pollution initiatives.

The most popular fee system is the ERU, followed by the flat fee. The average monthly residential family fee is US$5.14 and the median ERU is 269.42 m² impervious area. Fees ranged from zero to US$69.25 per month (Campbell et al. 2016). Fees for non-residential properties are proportional to the ratio of the parcel impervious area to the ERU.

Comparison

Table 4 shows a comparison between all the countries described.

Table 4

Stormwater fees (single family residential) across by world

Country Year Major system fee Range monthly fee (US$) Monthly fee (US$) ERU (m²) Fee/m² 
Australia 2017 Flat – 4.72 – – 
Brazil 2002, 2008, 2016 EHA/ERU 1.34–7.28 3.56 288.10 0.014 
Canada 2015 Tier 2.78–19.00 9.13 – – 
Ecuador 2016 Water Meter 0.25–120.00    
France 2011, 2012 ERU 0.00–478.09 134.46 300.00 0.448 
Germany 2014 TPA – – – 1.507 
Poland 2014 ERU 0.09–2.24 0.58 – 0.590 
South Africa 2010 DAC 7.92–12.43 9.45 160.00 0.059 
Unites States 2016 ERU 0.00–69.25 5.14 269.42 0.019 
Country Year Major system fee Range monthly fee (US$) Monthly fee (US$) ERU (m²) Fee/m² 
Australia 2017 Flat – 4.72 – – 
Brazil 2002, 2008, 2016 EHA/ERU 1.34–7.28 3.56 288.10 0.014 
Canada 2015 Tier 2.78–19.00 9.13 – – 
Ecuador 2016 Water Meter 0.25–120.00    
France 2011, 2012 ERU 0.00–478.09 134.46 300.00 0.448 
Germany 2014 TPA – – – 1.507 
Poland 2014 ERU 0.09–2.24 0.58 – 0.590 
South Africa 2010 DAC 7.92–12.43 9.45 160.00 0.059 
Unites States 2016 ERU 0.00–69.25 5.14 269.42 0.019 

Note: Brazil and South Africa fees refer to simulations of hypothetical cases. In South Africa, a currency conversion was used for the year 2010 because it is the year of the survey, not its publication (2013), because it involves large amounts of land acquisition, which can vary greatly each year.

It can be observed that the average impervious reference area is similar in countries with data, but fees have significant variation. France had the highest average monthly fee (US$478.09), which is due to the commune of Syage taxed a minimum impervious area of 600 m² (US$0.79/m²). This commune craved charge of the largest owners, those who contribute most in stormwater runoff. Germany has the highest fee per m² (US$1.507) and the stormwater funding is increasingly addressed. Brazil has the lowest fee/m², which is an average of three different studies. This average fee is close to the US fee, which is more advanced in SWM. This emphasizes the low fee practiced in USA, since this subject is not debated or it is a priority in Brazil.

CONCLUSION

This publication provides a brief overview of current legal issues associated to stormwater funding. Some economic mechanisms can finance SWM, as market-based, incentives, rebate and tradable allowances instruments. The issues on stormwater funding attract attention in all of the countries surveyed, for a variety of reasons, including concerns about stormwater impacts on flooding and water quality, and the sustainability of receiving water ecosystems.

The experience of developed countries shows that charging stormwater fees is a successful mechanism to fund their legal obligations and environmental protection and imposing payment is a way to get the attention of the residents on their impact on water resources. However, it can only draw attention of people if the fees are significant in comparison to other expenses. In practice, stormwater fees are not high enough to motivate single family households to reduce their runoff. In addition, the lack of integration between stakeholders could be a barrier to stormwater financing.

This study has shown that there are few papers related to stormwater fees, which may be a consequence of the common-sense approach of many countries about this issue, leading to little interest for academic discussion. Stormwater fees were found in Australia, Canada, Denmark, Ecuador, England, France, Germany, the USA, Poland, Wales, Sweden and Switzerland; however, not all of these fees were described, due the absence of academic publications. France presented the highest average monthly fee while Brazil has the lowest fee per m². This fee refers to hypothetical studies and is comparable to the fee in the USA. Revenues collected can cover the costs associated with management of stormwater (system maintenance, flood control, administrative costs, educational programs, improvements and water quality programs) and stormwater services have a great contribution to the health and welfare of people living in communities.

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