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Part 1: Protect and enhance the shared water resources and environmental assets of the Basin

Strategy 1.2
Improve management of, and compliance with, the Cap on water diversions

Partner governments have taken a range of measures to preserve the existing balance between environmental and consumptive use of water resources in the Basin. The aim is to promote the health of the river system and enhance the efficiency of water use. Measures include The Living Murray, the Basin Salinity Management Strategy and introduction of the Cap. The Cap was one of the most important initiatives ever undertaken when in 1995 the Ministerial Council decided to limit diversions in the Murray-Darling Basin (see box).

What is the Cap?

The Cap was established to limit future growth in water diversions. It was set at the 1993–94 (for New South Wales, Victoria and some of South Australia) levels of development related to levels of extraction for each valley.

The introduction of the Cap was seen as an essential first step in establishing management systems to achieve healthy rivers and sustainable consumptive uses.

By limiting future growth in consumptive water use, the Cap promotes the sustainable use of the Basin’s resources by:

  • preserving the existing security of supply for river valleys
  • helping maintain water quality
  • encouraging the efficient use of water, which reduces waterlogging and land salinisation, and
  • preventing further deterioration of the flow regime for the environment.

In most of the Basin, the Cap will limit future water use to the volume of water that would have been diverted under 1993–94 levels of development. Targets for each state are approved by the Ministerial Council. Once targets are set, each state is responsible for implementation within its own jurisdiction, allowing for account to be taken of local circumstances.

Figure 2 shows annual diversions for the period from 1997–98 to 2005–06.

Figure 2 The Cap on diversions
‘The Cap limits extractions at the 1993–94 levels of development’

2695 MDBC AR figure 2 Cap on diversions (NEW).eps

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Monitoring and reporting under the Cap

As directed by the Ministerial Council, the Independent Audit Group (IAG) conducted the annual audit of Cap implementation for 2005–06 in October 2006 and reported to the Commission in December 2006 and April 2007.

The Water Audit Monitoring Report is produced each year as a requirement of Schedule F of the Agreement. The report provides a broad picture of 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.

The key findings of the audit were:

South Australia

Diversions in all Cap valleys were within acceptable bounds for Cap management.


Diversions in all Cap valleys were within acceptable bounds for Cap management.

New South Wales

Diversions in the combined Barwon–Darling – Lower Darling valley continued to exceed long-term Cap estimates.

An assessment of Cap compliance for the New South Wales Border Rivers was not possible because the Cap had not been defined in that valley. The IAG has recommended that a Cap for the valley be finalised as a matter of priority.

Diversions were within acceptable bounds for Cap management in the remainder of New South Wales.

The combined Barwon–Darling – Lower Darling Cap valley, which was declared in breach of the Cap by Commission in June 2005, exceeded the trigger for a Special Audit. On receipt of the IAG report to this effect, Commission in December 2006 reiterated its earlier declaration that the combined Barwon–Darling – Lower Darling Cap valley continues to exceed the Cap and asked the IAG to conduct a Special Audit. The Special Audit by the IAG, conducted in March 2007, confirmed that the Cap had been exceeded.

New South Wales reported to the Ministerial Council meeting in May 2007 on the underlying reasons for excessive diversions in the combined Barwon–Darling – Lower Darling Cap valley and advised of its proposal to assign a share of the average annual Cap from 2007–08 to each user. New South Wales argues this will bring diversions within Cap limits.


Following the gazettal of Resource Operations Plans for the Warrego, Paroo, Moonie, and Nebine catchments in January 2006, Queensland submitted Cap proposals for these valleys in November 2006. The Cap proposals for these valleys were audited by the Independent Audit Group in February 2007 and subsequently agreed to by the Commission and Council. Cap to these valleys will apply from 2006–07.

Draft Resource Operations Plans for the Border Rivers and Condamine–Balonne were released in January and April 2007 respectively. These Resource Operations Plans are expected to be finalised by late 2007. Cap proposals for these valleys will be developed within six months of the gazettal of the final plans and will be submitted to the Commission.

Australian Capital Territory

The IAG has recommended that the Australian Capital Territory finalise its Cap by October 2007.

Response to audit

To respond to the recommendations of the audit, the Commission completed two projects: revision of Schedule F to the Murray-Darling Basin Agreement and work on land surface diversions.

Work on Schedule F included the need for a definition of diversion, defining the Caps for Queensland and the Australian Capital Territory, changes to the South Australian Cap, and a mechanism for adjustments to the Cap for environmental flows. Drafting of these amendments involved consultation with the jurisdictions.

The aims of the land surface diversions project are to:

  • suggest options and a preferable approach to determine the components of land surface diversions and to provide an estimate of the infrastructure work required for estimating the land surface diversions at the pilot sites, and
  • estimate the components of land surface diversions at 12 pilot sites when suitable flood events occur.

The first stage of the project, which is near completion, has recommended that on-ground monitoring of diversions is the most feasible option to estimate these diversions. Twelve pilot farms have been identified and a cost estimate has been provided to implement the preferred option. The project report is under consideration.

Amendments to the Diversion Definition Register (which defines the diversions under the Cap in each river valley in the Basin) were proposed to implement recommendations of the report.

In addition to the two projects detailed above, work continued on the response to the recommendations of the Audit of Murray-Darling Basin Cap Data Management Systems (2004), through the preparation of a Cap manual.

Accreditation of Cap models for Basin rivers

Cap models are tools for the assessment of compliance with the Cap. Schedule F requires that analytical models be developed by the governments of New South Wales, Victoria and Queensland for determining the annual Cap diversion target for each designated river valley* within the territory of that state. However, Schedule F also requires that, before a model can be used to determine an annual Cap target, it must be approved by the Commission. The Independent Audit Group has recommended that an independent audit of Cap models be carried out to determine whether they are suitable for approval by the Commission. Accordingly, the Commission has appointed an independent technical auditor to assess Cap models developed by the MDBC office and other organisations.

The Cap has not been defined for four of the 23 Cap valleys in Schedule F (two each in Queensland and New South Wales). Of the remaining 19 Cap valleys, South Australia does not intend to use Cap models for three of its four Cap valleys. This leaves 16 Cap models that need to be audited and approved. Audits are complete for five models, of which three are accredited, nine models are currently under audit and two remain to be submitted.

*In South Australia ‘valley’ may refer to, for example, an urban management area.