Revenue Levers to Fund Infrastructure

Tax-based revenue

Tax-based revenue is a core payment mechanism for infrastructure drawn from public fiscal resources and, generally, structured as a payment stream with a lower risk rating than revenue streams exposed to degrees of commercial risk. The most common forms of tax-based revenue are:

• Availability payment
• Shadow toll
• Tax breaks.

User-based revenue

User-based revenue is a core payment mechanism that transfers a degree of commercial risk to the private sponsor of an infrastructure asset by enabling the operator to directly charge customers for services. The most common forms of user-based revenue include:

• Toll revenues
• Tariffs on regulated utilities
• Unitary pricing
• Segment pricing
• Dynamic pricing.

Ancillary revenue

Ancillary revenue is an additional stream of revenue that is designed to complement the core revenue stream (e.g. tax-based or user-based revenue). It is created by extending the scope of a program or project to include revenue-generating services that support or complement core operations. The ability to generate ancillary revenue is often driven by the structural features of the infrastructure asset, population density around the asset, user income levels, and the ability of project designers to come up with incentives for private participants or sponsors to offer non-core services. Examples of ancillary revenue include:

• Advertising
• Real estate revenues
• Energy solutions
• Maintenance and repair services
• Commercial retail revenues
• Parking revenue.

Value capture

This is a secondary revenue stream for infrastructure that relies on the ‘capture’ of spillover value created by an infrastructure asset. There are many mechanism of value capture, but common ones are targeted taxation, levies, and rates on spatial zones surrounding infrastructure assets in urban locations. Categories include:

• Special district taxation
• Betterment levies
• Developer charges
• Stamp duties
• Tax Increment Financing (TIF)
• Real estate taxation
• General property tax.

Data

Revenue can be collected from the monetisation of data generated by an infrastructure asset. This is the least mature of the revenue levers, but it is evolving rapidly. Both operational data and consumer data can be monetised, and some infrastructure assets may generate other monetisable data.