A preliminary analysis of the effectiveness of a rainwater tank rebate scheme for both the Victorian Government and individual householders who participated in the scheme was undertaken, together with a determination of the factors affecting the water savings achieved. Yarra Valley Water provided the data for 4,391 households who received a government rebate for installing a rainwater tank and for 4,400 households who did not participate in the scheme. The water savings from different tank sizes were calculated. A comparison of water consumption between households with rainwater tanks and those without was also undertaken to determine the benefit of rolling the rebate scheme to households who are currently not under the scheme. The analysis revealed that installation of rainwater tanks contributed to a reduction of 42.5% in average household water consumption. The results also show that, depending on the tank size and uses of rainwater, the payback period (PP) ranged from 12 to 47 years for householders and 1 to 12 years for the Victorian Government. All rainwater tank sizes except 2,000–4,999 L with connection to toilets and/or laundry have PPs of less than 20 years to householders. This is due to the high capital and operating costs even with higher rebates from the government.

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