In this study, we investigated students' learning outcomes and engagement with an online laboratory called Online Watershed Learning System (OWLS) employed within a classroom and explored the relationship between learning outcome and engagement. The OWLS is the web interface for a real-time environmental monitoring system and integrates a user-tracking system to track students' interactions. We conducted a pre-experimental quantitative research study in a third-year Civil and Environmental Engineering course. We assessed students' performance and perception of their learning, behavioural engagement, and their perception of engagement attributes in the context of environmental monitoring. Examples of key findings include: OWLS is effective in helping attain learning outcomes related to environmental monitoring, the order of assessment questions can impact students' performance but not their engagement, and students' performance is inversely related to the number of clicks they used to complete an OWLS-based task. The study informs the effective design of online laboratories and leverages online laboratories-based education.