The state of water resources in the Mount Lofty Ranges has been the subject of discussion for at least 10 years. As early as 1989, it was suggested that controls were necessary to restrict the development of specific activities where it could be justified that the risk to surface water should be minimised. Concerns regarding water availability have risen recently due to increased water use associated with changes in land use, towards intensive agricultural practices and smaller land holdings. Similar concerns eventually led to the proclamation of prescribed water resource areas over portions of the Barossa and Clare Valleys in the early to mid 1990s. Farm dam capture and watercourse abstractions have their greatest effect on the surface water resources of the Mount Lofty Ranges in three ways: - competing with SA Water by capturing water that would otherwise be collected by metropolitan reservoirs; - affecting the integrity of aquatic ecosystems through reduced flow volumes and altered streamflow regimes; - competing with other downstream farm dams or watercourse abstractions. These issues are attracting greater attention due to recent increases in the rate of farm dam development. In the Mount Lofty Ranges Watershed alone dam construction approvals continue at rates in excess of 1 GL/yr. Many of the larger farm dam developments have been constructed in the eastern sections of the Mount Lofty Ranges where surface water resources are modest, irrigation demands tend to be higher than in wetter areas, and the consequent potential for conflict is greatest. Estimates of total farm dam storage in the Mount Lofty Ranges tend to differ but indicate that, while total storage represents a modest percentage of mean annual runoff, some catchments have farm dam capacities that exceed their total runoff during dry years. Such levels of development tend to deprive downstream access to water during times when it is most needed, with the potential to stop streamflow from at least some sections of catchments for several years. Mean annual streamflow reduction may vary from 10 to 50% depending on the area and level of development. During summer or prolonged dry periods, the reduction may be as high as 70 to 80%. Beyond the reduction in total volume, farm dams alter ecologically significant streamflow regimes. Ephemeral streams, common in the Mount Lofty Ranges, are characterised by extended periods of low or no flow. Pools contract during prolonged dry periods forming refuges for biota which are maintained by small volumes of runoff or baseflow. Ecosystems then respond to the onset of early season flows during late autumn and early winter. Low flows derived from groundwater and erratic summer rainfall that provide pool maintenance and connection, show the greatest percentage reduction in streamflow under intensive farm dam development, compromising the ability of aquatic ecosystems to survive dry periods. In these cases, the number of no-flow periods and their duration increases. Sustaining low flows are severely reduced in number and duration, and in cases of heavy dam development, removed. In addition, late autumn and early winter flows are greatly reduced or removed. Their duration is shortened and their onset may be delayed by up to a month depending on the degree of development, disrupting the migration patterns of some species of fish. Moderate flows that maintain the river environment are also reduced in number and duration, causing a loss of habitat, habitat diversity and obstruction of free passage through the stream. Farm dams have little effect on very large over-bank flows. This report recommends that work be undertaken promptly to assess the surface water storage status of many of the sub-catchments in the Mount Lofty Ranges, to support and enhance current water resources management and future management options.