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The above graphic illustrates one of the main challenges of watershed protection: jurisdictional and watershed boundaries rarely align. This issue generates questions about who is responsible for, and who should pay for, watershed protection. Over the past decade, the Environmental Finance Center at UNC has developed and applied the concept of a revenueshed to help communities answer such questions. We define a watershed protection revenueshed as the area within which revenue is generated for watershed protection. Thinking in terms of this concept can help address watershed protection challenges by (1) cultivating accountability, (2) generating discussions among local governments, and (3) developing interactive financial tools to assist in policy decision-making. In a recent report for the Conservation Trust of North Carolina, we applied the revenueshed concept to the local framework of North Carolina’s Upper Neuse River Basin.

Here are some of the things we learned and cover in the report:

1.       Hydrological connectedness binds residents up- and downstream.

Upstream communities’ land-use decisions, stormwater runoff, and wastewater treatment plants have a significant impact on water quality in the UNRB. Despite this obvious connection, there are limited examples of local governments “connecting” their revenue-generating authority in ways that mirror hydrological boundaries.

 2.       Watershed restoration regulations promote the “polluter pays” principle, resulting in less attention towards the “beneficiary pays” principle.

Downstream communities located outside of the UNRB use water impounded in the watershed’s reservoirs. This water has helped fuel regional growth and now supports a population exceeding 450,000 (predominantly in the city of Raleigh). These downstream communities do not directly impact the water quality and quantity flowing into Falls Lake, but they are heavily invested in protecting their water supply watershed. While current watershed protection legislation in North Carolina targets those local governments within the watershed, the beneficiaries of the watershed can provide substantial assistance to watershed protection and should not be overlooked.

 3.       Leveraging the resources necessary for comprehensive restoration requires jurisdictional collaboration.

The population in the UNRB and adjacent areas has grown rapidly in the last few decades and has placed greater stress on water resources. Growing populations require advance, proactive planning to increase water security. Collaboration between local jurisdictions within and adjacent to the UNRB is critical to effectively manage and protect water resources to meet growing demand. Restoration and preservation financing that is done piecemeal fails to tap into the economies of scale and beneficiary pooling advantages of a more comprehensive approach.

4.       North Carolina law provides the freedom to implement a variety of  watershed protection revenue systems (N.C. General Statutes §160A‑314, §162A‑9, §162A‑49).

Water utilities often expand outside of municipal boundaries and can draw from their full customer base. Stormwater utilities have a smaller customer base, since they are limited to those customers located inside the municipal boundary. Stormwater fees are collected to minimize the impact of a city on its watershed and are often used to protect the water flowing downstream. Raleigh has expanded their water bill to include a watershed protection fee. Water utilities are an ideal conduit through which to leverage watershed protection fees because they focus on protecting their own water supply source. The City of Durham also approved a watershed protection fee in 2011 (one cent per 100 cubic feet) and dedicates $500,000 of its water utility revenue toward watershed protection.

5.       Watershed protection often costs less than watershed restoration.

It costs less money to protect a watershed now than to attempt to restore a watershed to health in the future. A previous study estimated the average willingness-to-pay for watershed protection in a western North Carolina watershed at $139 per year per residential household (Kramer, 2002). Most examples of explicit watershed protection fees cost less than $20 per year.


Click to learn more about the project and read the full report.

This project was completed for the Conservation Trust for North Carolina as part of the U.S. Endowment for Forestry and Communities Healthy Watersheds through Healthy Forests grant: Protecting the Future of the Upper Neuse River Basin.