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7 A Water Efficiency Labelling Scheme for New Zealand

 

7.1 Introduction

Australia is in the process of introducing a mandatory water efficiency labelling scheme (WELS) for six specific products: washing machines, dishwashers, taps, toilets, showerheads and urinals. The labelling aspect of the scheme will allow consumers to see how water-efficient a product is via a rating scheme. WELS is not a product stewardship measure: it deals primarily with consumer information, and a mandatory system is being considered.

The scheme was agreed by the Environment and Heritage Ministers of the Australian Commonwealth and state and territory governments, operating as the Environment Protection and Heritage Council, and it comes into effect in Australia in May 2006. Water supply–demand balances are an important problem in Australia and mandatory WELS is an important element of demand management.

There are strong trans-Tasman trade reasons for New Zealand to introduce a water efficiency scheme. The New Zealand Government has to respond to the Australian initiative because our trading relationship with Australia means that we generally seek to have regulatory harmony between the two countries.

7.2 Rationale for New Zealand

Water efficiency labelling of products will help consumers to reduce water use.

Although New Zealand is wetter than Australia, there are still issues with securing and conserving water supplies. Many areas with reticulated town supply face restrictions on water use, especially in summer. Water efficiency labelling will contribute to reducing the need for increased supply capacity. The volumes likely to be saved are modest, so the savings here are not likely to be great. In areas without a supplier of piped water residents have to provide their own supply, often through collecting rain water off the roof. Around 13% (511,000 people) (Ministry of Health, 2005) of the population are in this situation and get their water from non-registered sources. Information on water efficiency will be especially important to these people when they purchase appliances and undertake renovations.

A reduction in hot water use will reduce energy consumption. This provides savings for consumers in terms of reduced energy (usually electricity) for water heating. Washing machines, dishwashers and shower heads can all affect energy use through reducing water consumption. Because of this there is a link to energy efficiency labelling and testing. Use of hot water is one of the variables assessed when assessing energy efficiency.

A reduction in water use will also provide savings and improvements in the area of wastewater disposal. Many of our smaller plants need upgrading to meet acceptable standards. Savings in water use may reduce the costs of running and providing wastewater collection and treatment systems. The volume that is likely to be saved is only a relatively small proportion of the total, however, so savings may be limited. There may be some worthwhile local savings where sewers are nearing full capacity so that upgrades can be deferred.

In areas using septic tanks (covering about 15 to 20% of the population) the contribution of water saving is likely to be more important. Many of the areas reliant on septic tanks have poorly draining soils and wet conditions. Modern appliances such as automatic washing machines have greatly increased the water discharged into the septic tank. Decreasing the volume of greywater entering the septic tank and reducing the outflow to the disposal field (where the effluent soaks into the ground) means that the soil is more likely to remain permeable and not blocked with bacterial growth. Many old septic tanks are especially susceptible because they are often not well designed or have limited capacity. Failure of septic tanks to deal with effluent can lead to environmental damage, such as contributing to the eutrophication of lakes and streams, and to health risks through contaminating water and shellfish.

There are also trade reasons for introducing mandatory labelling. Under the Trans-Tasman Mutual Recognition Arrangement (TTMRA), a product that may be legally sold in New Zealand may also be sold in Australia, even if it does not meet the requirements of any further Australian regulations. The TTMRA would, therefore, allow New Zealand products with no water efficiency labelling to continue to be able to be sold on the Australian market after the mandatory standard comes into effect.

If non-compliant New Zealand products did continue to be sold on the Australian market, this would have a negative impact on the efficacy of Australia's mandatory standard and would likely cause concern among Australian industry, which would have to meet any costs of complying with the standard but would compete with products that did not. Australia could decide to respond to this by seeking a temporary exemption from the TTMRA to prevent these non-compliant New Zealand products being sold on the Australian market. An initial 12-month exemption could be extended for a further year, provided two-thirds of relevant state, territory and federal ministers agreed. A permanent exemption would require the agreement of all jurisdictions, including New Zealand.

Australia is New Zealand's biggest market for water-consuming appliances. There is the potential for trade disruptions and tension resulting from the continued presence of non-compliant New Zealand products on the Australian market. This could be avoided if New Zealand manufacturers exporting to Australia complied with the same water efficiency labelling standards.

A cost–benefit analysisfor WELS (Ministry for the Environment, 2004b) showed that adopting a mandatory water efficiency labelling scheme can yield small net benefits for New Zealand if it achieves small improvements in the water efficiency of products. The value of the reductions in energy use for water heating was estimated to be much more significant than the value of saving water, and would be up to 90% of the total benefits for some products. This report only considered costs where water was supplied by a local network and waste was treated through a district sewerage scheme. The total benefits calculated are therefore only the benefits relating to these situations and do not cover areas not connected to local water supply networks and sewers.

The cost–benefit report considered that the costs for companies of a mandatory scheme are likely to be relatively small. This is because most products sold in New Zealand are also sold in Australia, so there would be little in the way of additional costs of testing for extending the scheme to New Zealand. The proposal is also similar to energy labelling. Any move to make hot water use more efficient saves both energy and water, so some of the testing for water efficiency is already being done. For companies, the main costs will be the costs of the labelling, although there may also be additional costs for registration to cover the costs of government administration. However, for products sold in both countries these are expected to be sunk costs – they will already have been incurred for registering with the Australian scheme.

7.3 Feedback on proposed legislation sought

The first stage in implementing mandatory water labelling is to create the legal power for water efficiency labelling regulations to be promulgated. None exists presently. The second stage will be the development of and consultation on the regulations themselves, including which products should be covered and what performance standards products should met. Additional public comment will be sought on specific labelling requirements for different products before any regulations are finalised. Questions are provided at the end of this section to help focus your feedback on these issues.

Four of the products listed under WELS (urinals, toilets, shower heads and taps) fall under the Building Code. The New Zealand Building Code has many common elements with the Plumbing Code of Australia, and many of the means of compliance are joint Australian – New Zealand standards. WELS standards and labelling for these products will need to be consistent with the Building Code and the relationship of these to the Building Code will need to be made clear. The New Zealand Building Code is currently under review and will include provisions for the promotion of sustainable development, such as water conservation and water efficiency. The review is scheduled to report to the Minister in November 2007.

Decisions about how best to administer labelling will be a consideration in determining in which Act the provisions relating to water efficiency will be included. It could be under the product stewardship legislation proposed in this discussion document, or be an amendment to an existing Act such as the Environment Act.

7.4 How closely do we already align with Australia?

If introduced into New Zealand the WELS would require firms importing or manufacturing products for sale in New Zealand to label them, using a standardised design, and to provide customers with information on the expected water consumption from their use. The information provided would be based on tests of water use by independent laboratories.

The regulatory set-up would be similar to New Zealand's energy efficiency regulations, whereby the products would be listed with the labelling and efficiency standards they are required to meet (AS/NZS6400). In the WELS case, it would be important to achieve trans-Tasman consistency on:

  • the types of products subject to the water efficiency labelling scheme
  • registration and labelling requirements
  • minimum performance/efficiency requirements
  • technical standards.

For New Zealand, the minimum performance level should be contained in the Building Code.

What would be the effect on your business if New Zealand aligned these aspects of the scheme with Australia's scheme?

7.5 Administration options

To run such a scheme a body of some description will need to:

  • register products and maintain a database of registered products
  • monitor whether standards are being met and enforce the standards if they are not being met.

There are various options for who could administer the scheme, including:

  • Australia, under contract to New Zealand
  • the EECA, working closely with Australia, as they do now for energy efficiency labelling
  • the Ministry for the Environment, working closely with Australia
  • other mechanisms.

The Ministry for the Environment option is seen as the least efficient because the Ministry currently does not have any similar role.

Do you have any views about which administration option would be easiest for you?

WELS - water efficiency labelling questions to consider

14) Would water efficiency labelling influence your purchases of whiteware and plumbing products?

15) Would there be any savings to you or your council from reducing domestic water usage by using more efficient whiteware and plumbing fittings?

16) What are your views on having mandatory water efficiency labelling on the products identified in this section?

17) What would be the effect on your business if, under a New Zealand labelling scheme, we aligned the types of products subject to the water efficiency labelling scheme, registration and labelling requirements, minimum performance/efficiency requirements and technical standards with Australia's?

18) Do you have any views about which administration option would be easiest for you: a New Zealand-based or an Australian-based administration body?