The law of water balance states that the inflows to any water system or area is equal to its outflows plus change in storage during a time interval. In hydrology, a water balance equation can be used to describe the flow of water in and out of a system. A system can be one of several hydrological or water domains, such as a column of soil, a drainage basin, an irrigation area or a city. The water balance is also referred to as a water budget. Developing water budgets is a fundamental activity in the science of hydrology. According to the US Geological Survey: An understanding of water budgets and underlying hydrologic processes provides a foundation for effective water-resource and environmental planning and management. Observed changes in water budgets of an area over time can be used to assess the effects of climate variability and human activities on water resources. Comparison of water budgets from different areas allows the effects of factors such as geology, soils, vegetation, and land use on the hydrologic cycle to be quantified. A general water balance equation is: P = Q + ET + ΔS where P is precipitation Q is streamflow ET is evapotranspiration ΔS is the change in storage (in soil or the bedrock / groundwater) This equation uses the principles of conservation of mass in a closed system, whereby any water entering a system (via precipitation), must be transferred into either evaporation, transpiration, surface runoff (eventually reaching the channel and leaving in the form of river discharge), or stored in the ground. This equation requires the system to be closed, and where it isn't (for example when surface runoff contributes to a different basin), this must be taken into account. Extensive water balances are discussed in agricultural hydrology. A water balance can be used to help manage water supply and predict where there may be water shortages. It is also used in irrigation, runoff assessment (e.g. through the RainOff model ), flood control and pollution control.

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