What does the water balance equation describe in hydrology?

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Water balance in hydrology is about conserving water within a system. Water that enters a watershed through precipitation must be accounted for by what leaves the system or what is stored. The equation shows this by saying input (precipitation) equals outputs (runoff and evapotranspiration) plus any change in stored water. The storage term, ΔS, reflects gains or losses in soil moisture, groundwater, or other storage during the time interval.

This formulation captures the idea that all the water coming in is partitioned among immediate loss to the atmosphere, movement out of the system as runoff, and changes in how much water is held in storage. When storage doesn't change much over a long period, the equation simplifies to precipitation roughly balancing runoff and evapotranspiration. The other options mix up the relationships or omit the storage term, which is why they aren’t correct descriptions of the water balance.