Revenue size gives some indication of the actual or potential effectiveness of a particular financing tool in terms of environmental benefits, although it is not presented in relationship to total environmental needs. Low revenue size may not mean that a tool is ineffective, because it may be offset by other criteria scoring high, for example, the ability to leverage other financial resources, or the ability to enhance environmental awareness. However, low revenue size may signal problems, for example, it might suggest levying an environmental fee or tax cannot be justified in terms of added administrative costs, time and political difficulties. A proliferation of many small programs may be confusing and burdensome, leading to a decline in public acceptability. Here, the relative stability and predictability of annual revenues is compared for each tool to indicate whether the revenue source can be relied upon and readily estimated, audited, and factored into budgetary decisions.
Many factors can contribute to revenue instability.
Revenues from pollution control fines, penalties and cost-recovery are unpredictable and may result only after protracted legal negotiations. This criterion relates the rough dollar cost of the financial tool to the user with the amount of revenue saved or accessed as a result of using the tool. For example, private bond insurance is relatively costly but it can lower interest costs substantially through improved bond ratings, and may be critical to attracting bond investors. Similarly, private sector use of surety and performance bonds may enable a project to move forward. Privatization can result in lower construction, operations and maintenance costs, which may be translated into lower user fees, compared to the public alternative.