The Water Efficiency Labelling and Standards Scheme (WELS), introduced in July 2006, is a key program in the suite of options recently implemented by government agencies and water utilities to address water scarcity. WELS primarily influences water consumption by providing consumers with information about the water efficiency of all washing machines, dishwashers, toilets, urinals, taps and showers sold in Australia – thus enabling consumers to consider water efficiency as a factor in their purchase decisions.

However, the WELS program is not without costs. Governments, suppliers, retailers and consumers of WELS‐products potentially incur costs due to WELS activities and requirements. The Department of the Environment, Heritage, Water and the Arts, in its capacity as the WELS Regulator, commissioned the Institute of Sustainable Futures to analyse the cost‐effectiveness of WELS in contributing to the overarching objective of water security, compared to other urban water management options. Consistent with the regulatory impact statement conducted in 2003, this analysis uses a time horizon of 2005‐06 to 2020‐21.

The study found that WELS was significantly more cost-effective to achieve water security, when compared to the current or planned demand and supply options in Australia. In comparison to other water security options, WELS was found to have a relatively good cost-effectiveness. As a result, it is likely that WELS is part of a package of options to achieve water security in Australian jurisdictions. The study also suggests that at least theoretically, mandatory labelling can enable water users to respond to increases in water prices.