The Water Allocation Plan for the Morambro Creek and Nyroca Channel Prescribed Watercourses (including Cockatoo Lake and the Prescribed Surface Water Area) was prepared by the South East Natural Resources Management Board and adopted by Minister for Environment and Conservation, John Hill on January 13 2006.

The Prescribed Area was prescribed on the 12th April 2001 under the provisions of the Water Resources Act 1997. The area of prescription is marked in blue on Government Records Office plan No. 149/2001 (including Cockatoo Lake and Nyroca Channel). It was prescribed in response to an increase in demand for water for aquifer recharge schemes to address the increasing salinity of the adjacent underground water resource in the Padthaway Prescribed Wells Area (PWA). The Prescribed Area is a significant surface water and watercourse resource in the South East of South Australia, having important ecological and social values, which are likely to be affected by water diversion.
The headwaters of Morambro Creek are located in the western part of the Wimmera region of western Victoria. The creek flows from Victoria into the Upper South East of South Australia near Frances, flowing westerly to Cockatoo Lake (approximately 26 kilometres (km) north east of Naracoorte). Cockatoo Lake is one of few permanent inland water bodies in the South East and is an important waterbird refuge. The lake is also an important recreational resource for water skiing and boating. Water then flows along the Nyroca Channel, passes through the Harper range via the part of the Nyroca Channel completed in the early 1980s, finally discharging into the Marcollat Watercourse.
The Prescribed Area covers a catchment area of approximately 22,487 hectares (225 km2), and includes 30 km of the Nyroca Channel. It intersects parts of the Hundreds of Binnum, Geegeela, Hynam, Lochaber, Glenroy and Marcollat.

The majority of existing users divert water from the Morambro Creek or the Nyroca Channel. Others divert water via dams or drainage wells. The diverted water is used for aquifer recharge, stock, domestic, irrigation and recreation purposes. There is no industrial use in the Prescribed Area. Demand for water from the Prescribed Area is expected to increase. Approximately 100 drainage wells and natural runaway holes are scattered throughout the upstream portion of the catchment. It is likely they capture a significant portion of the surface water run-off in the catchment downstream of Frances, especially in the Pretty Gully area.

Morambro Creek is an ephemeral stream that flows on average 3 in 5 years. The highly variable nature of its flows is typical of South East streams. Analysis of available data indicates that 70-90 percent of the creek flows originate from the catchment in Victoria. Cross-border mean annual flow estimated from flow records at Frances is 2,500 megalitres (ML) to 3,000 ML. The characteristics of creek flows are influenced by the occurrence of dams, drainage wells and natural runaway holes west of Frances.

At present there are no formal surface water arrangements in place between the South Australian and Victorian governments to ensure a whole-of-catchment approach to management of Morambro Creek, nor for any of the other cross-border creeks in South Australia. The South East Natural Resources Management Plan identifies this issue as a threat to sustainable water resource management. It describes the development of a surface water agreement with Victoria as a key action for implementation. Discussions are underway with relevant Victorian regionally- based bodies with a view to developing a Memorandum of Understanding to enable better engagement on cross-border natural resource management issues and effectively implement a whole of catchment approach to management of the water resources of Morambro Creek and other shared surface waters. The proposed Memorandum of Understanding is the first step in fulfilling the vision of the South East Natural Resources Management Plan.