All it does is occupy approximately 1 litre of space in the cistern thus reducing the effective volume of the cistern and saving water.
It will work in that it will save you ~1 litre of water per flush, However, it will make the flush less effective so you may end up having to flush twice thus actually use more water. If you have a large, old cistern it may be worth it but if you have a modern small cistern I would not recommend it.
Lowering the float will significantly affect the flushing, far more than the same amount of reduction via a brick etc. In '76 all our flushes at work were 'adjusted' and the water useage increased due to double flushing and clearing blockages. Some of the flushes wouldn't. Later, the water was returned to the correct height and displacement used and that did reduce water useage.
As with a lot of things, initial idea is good but in practice it's bad. Modern toilets already use less water and so have a less effective flush as we found out recently. New Year's Eve we woke up to discover a blocked drain. Kitchen was flooded and human waste had made its way through the dishwasher, sink etc.
We have no kids so no-one had flushed anything that shouldn't have been flushed. When the drain guy used his high pressure jetting equipment to release the blockage, it appeared to be a ball of toilet paper that was the cause of the problem. Without going into too much detail, let's just say that at the time I was suffering from something that necessitated the use of quite a lot of loo roll in one go. A combination of loo roll that was a little harder (and so didn't break down as easily) than our normal one, increased quantity of it in the pan, and an 'eco-friendly' small amount of water for the flush all combined to block the drain.
Your bag will work to save water - but do you really want to?
Trouble with adjusting the float is that the top of the water is lower - which makes it harder to get the syphon started, or if it's the more recent drop-valve sort, lowers the initial flow rate which leads to lurking monsters.
Decreasing the volume of the tank has neither of these drawbacks - though as others have noted, the volume may be insufficient anyway.
Personal experience? I've used a Hippo bag for years in one of our toilets and never had any problems, though it's gone now as the new cistern had a lower volume anyway.
I have a 20-year old cistern, and a full flush uses quite a lot of water. I did look at changing the cistern but it didn't remotely add up on cost grounds e.g. to a dual flush. My water bill (metered) is only about £200/yr and it's got make at least some sense in money terms to change the cistern.
I do have a Bog Hog (plastic bag) and a plastic bottle filled with water in the cistern. I feel they are very helpful. I also have a Variflush device
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which I reckon make a big saving. The "if it's yellow, let it mellow..." is also popular here.
I haven't (happily/yet) had problems with blockages due to reduced flushing; however, I periodically flush the toilet continuously with three buckets of rainwater (via the cistern before it empties to make it continuous) to ensure that any blockages that might be thinking about developing are discouraged.
I happen to think it's a terrible waste of water & resources to use water purified to drinking standards for flushing the toilet. I did look into a rainwater harvesting system about 8 years ago, but the cost of putting such a system into an existing house (as opposed to a new build) was prohibitive.
I concur with everything that Allan says above: we do exactly the same (ours is called a Hippo or summat), and for the same reasons, and with the same success.
We actually have two toilets: not only was it not really worth installing a Hippo in the newer toilet, but I couldn't satisfactorily fit it into the cistern; however it has worked very well (along with a filled plastic bottle as well) inside the old toilet's cistern -- for about 10 years now.
The point about a brick, however, is that it's impossible to fit one in your cistern (unless you smash it up first). These bags can be slid in nicely. (And so, btw, can slim plastic drinks bottles, filled with water.)
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