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The Cap

Since the 1950's the quantity of water diverted from the rivers of the Murray-Darling Basin increased substantially. While the development of the Basin's water resources has brought many social and economic benefits, eg through activities such as irrigation, it has also adversely affected the health of the river systems.

Amid growing concerns about the changes to the flow regimes in rivers within the Basin and their consequences, the Ministerial Council in June 1993 initiated an audit of water use in the Murray-Darling Basin . The Audit, which was completed in 1995, ( An Audit of Water Use in the Murray-Darling Basin - June 1995 ) showed that if the volume of water diversions continued to increase, this would exacerbate river health problems, reduce the security of water supply for existing irrigators in the Basin, and reduce the reliability of water supply during long droughts.

In response to the findings of the Audit, a limit was imposed on the volume of water which could be diverted from the rivers for consumptive uses. This limit is called the Cap. An interim Cap was imposed in June 1995. Following an independent review of equity issues ( Setting the Cap - Report of the Independent Audit Group - November 1996 ) permanent Cap for New South Wales (NSW), Victoria and South Australia was implemented from 1 July 1997 . For NSW and Victoria, the Cap is defined as “ The volume of water that would have been diverted under 1993/94 levels of development.” For Queensland , (a moratorium on further development in place since September 2000) and the Australian Capital Territory which together divert less than 7% of total water being diverted in the Basin, the Cap arrangements are still being worked out.

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.

Implementing the Cap

The Cap established a new framework for water sharing in the Basin. Individual government agencies are responsible for implementing the Cap in their State; this has involved changes to the way in which they allocate their water.

The Cap is being managed in accordance with the set of formal rules in Schedule F to the Murray-Darling Basin Agreement . The Cap is managed for the designated Cap valley defined in Schedule F . The implementation of the Cap within a State or Territory is the responsibility of the concerned Government. The Commission is responsible for auditing the compliance with the Cap. An Independent Audit Group (IAG) conducts an annual audit of the diversion in every designated Cap valley of the Basin comparing observed diversion against annual targets determined by valley Cap models. The IAG determines whether the Cap has been breached in any Cap valley and reports ( Independent Audit Group Report ) to the Commission. In the case of a breach of the Cap in any Cap valley, Schedule F requires that the concerned State Government reports to every Council meeting subsequent to the declaration of the breach of Cap on (a) the reasons why the breach occurred (b) the actions taken, or proposed to be taken by the State to ensure that diversions are brought back into balance with the Cap and © the period within which diversion will be brought back into balance with the Cap.

As required by Schedule F to the Murray-Darling Basin Agreement , the Commission also produces and publishes each year a Water Audit Monitoring Report that documents water use within the Basin and assesses the five state and territory governments' compliance with the Cap.

Reviewing how the Cap has been operating

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:

• the Cap has supported the Ministerial Council's aim of achieving the ecological sustainability of the Basin's river systems;

• while the Cap does not necessarily provide for a sustainable Basin ecosystem, it has been an essential first step in achieving this outcome;

• that without the Cap there would have been a significantly increased risk that the environmental degradation of the river system of the Basin would have been worse

Also see:
For further information about why the Cap was needed and how it operates:
see The Cap Brochure [PDF] 684Kb

For further information about the volume and reliability of water from the River Murray:
see What Affects the reliability of Your Water Allocation 1999 [PDF] 330Kb

For further information about purchasing water:
see Interstate Water Trade

For further information about material published before 2005 such as
Cap Overview 1997/98 - Striking the Balance [PDF] 290Kb
see CAP Archives

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