Which of the following describes a funding method where costs are incurred as projects are used?

The concept behind the funding method described is "Pay as you use," which refers to a system where expenses are incurred based on the actual usage of a service or project. This method aligns costs with the benefits received, meaning that funds are allocated only as projects are utilized, minimizing upfront financial burdens.

This approach is beneficial in various contexts, as it allows for flexibility in budgeting and funding, particularly for services that are not used uniformly by all users. For instance, in utilities or shared resources, users might be billed based on their consumption, ensuring that payments correspond directly to the level of service required.

The other options represent different funding mechanisms but do not specifically encapsulate the concept of incurring costs based on direct usage of projects. For example, "Pay as you go" typically involves funding from current revenues as opposed to incurring costs tied directly to usage over time. "Impact Fees" are charges imposed on developers to fund infrastructure needs caused by new development rather than being based on ongoing service use. "Revenue Bonds" are debt instruments issued based on expected future revenue from specific projects, rather than on real-time usage of the projects themselves.