The Ministerial Council in 1995 agreed to a Cap (upper limit) on the surface water diversions in response to "An Audit of Water Use in the Murray-Darling Basin - June 1995" report that confirmed diversions in the Basin had grown, could grow further and that this growth had caused decline in river health. The two objectives of the Cap were:
For New South Wales and Victoria, the Cap was defined as "The volume of water that would have been diverted under 1993–94 levels of development,". The annual Cap for a valley is not the volume of water that was used in 1993–94 rather the volume that would have been used with the infrastructure/management rules existing in 1993–94 and climatic conditions experienced during the year in question. South Australia, Queensland and the Australian Capital Territory have agreed to different levels of development as their Cap.
The Review of the Operations of the Cap (2000) considered the Cap as an essential first step towards achieving healthy rivers and sustainable water use. While the Cap restrains further increase in water diversions, it does not constrain new developments provided the water for them is obtained by using water more efficiently or by purchasing water from existing developments.
The Cap will be replaced by sustainable diversion limits (SDL) under the Basin Plan by 2019.
The Cap is managed on a valley basis according to formal rules set out in Schedule E to the Murray—Darling Basin Agreement of the Water Act 2007. States are responsible for the implementation of the Cap within their jurisdictions. The Murray-Darling Basin Authority is responsible for auditing and reporting the compliance with the Cap.
The annual Cap targets are calculated with help of river (computer) models that are set to the 1993–94 level of development and take into account the climatic conditions experienced during the year. An Independent Audit Group (IAG) annually audits the Cap in every valley of the Murray—Darling Basin (MDB), comparing observed diversion against annual Cap targets and determines if a valley has breached the Cap. In the case of a Cap breach declared by the Authority in any valley, the concerned State Government must report to every subsequent Ministerial Council meeting and until the breach has been revoked.
The report must include:
As required by Schedule E of the Murray-Darling Basin Agreement, the Authority also produces and publishes each year a Water Audit Monitoring Report. The Water Audit Monitoring (WAM) report complements the Independent Audit Group (IAG) report for that water year. Whereas the focus of the Independent Audit Group report is the Cap compliance and the activities related to it, the WAM report provides a broader picture of the Cap compliance, water use, accuracy of water use figures, climatic overview for the water year, water availability through allocations, off-allocations and water trading, storages losses, and groundwater use.
To inform and enable the implementation of the Cap, the Authority conducts investigations from time to time and publishes these reports to inform the wider community. Recently the Authority has completed the following investigation projects:
For further information on these projects see Cap Projects
In 1999 the Murray-Darling Basin Ministerial Council commissioned a comprehensive review of the operation of the Cap. This review focused on how the Cap can be refined to better meet the needs of the Basin. The Review of Cap Operation in 2000 concluded among other things that: