In deciding which financing scheme should be used for surface water management, the governmental units and watershed organizations must determine who should bear the burden of payment: those who benefit from improved drainage, better flood protection and better water quality, or those who contribute to the problems, or some mix of each. Those assessing costs should be careful to analyze the impact of the financing scheme on the individuals or classes of individuals and to determine whether the scheme is equitable and efficient. This report examines briefly the steps that must be addressed in the financial analysis when developing a surface water management program. The report deals with three areas of particular importance: financing principles, sources of expenditures, and potential financing mechanisms.