A water balance or water budget is the notion of accounting for the movements and transformations of water in a system (that is, watershed or drainage basin). The change in storage of water, or 'mass balance' is the main concept behind water balance. There are a number of components of this system:
Input

Storage

Output

precipitation
groundwater inflow

soil
groundwater
surface water

evapotranspiration
stream flow
groundwater outflow



Water balance calculations can be useful for estimating evapotranspiration. There are some simple formulas involved in these calculations:
$\mathrm{\ΔS}\=\mathrm{Input}\mathrm{Output}$
where, $\mathit{\ΔS}$ is the change in storage. To calculate the input, use the following formula:
$\mathrm{Input}\=P\+{G}_{\mathrm{input}}$
where, P is the precipitation and ${\mathit{G}}_{\mathit{input}}$ is the groundwater input. Similarly, you can calculate the output using the following equation:
$\mathrm{Output}\=\mathrm{ET}\+Q\+{G}_{\mathrm{output}}$
where, ET is the evapotranspiration (combination of transpiration and evaporation), Q is the stream flow, and ${\mathit{G}}_{\mathit{output}}$ is the groundwater output. Combining all of these equations yields:
$\mathrm{\ΔS}\=P\+{G}_{\mathrm{input}}\left(\mathrm{ET}\+Q\+{G}_{\mathrm{output}}\right)$
However, in most cases, the difference between the groundwater input and output are negligible compared to the other terms; therefore, you can simplify the equation to the following:
$P\left(\mathrm{ET}\+Q\right)\=\mathrm{\ΔS}$
Similarly, in studies where long term water balance starts and ends at the same time of the year, the net change in storage is often small compared to the other terms in the equation. Therefore, making the assumption that $\mathrm{\ΔS}\approx 0$, you can further simplify and rearrange the equation to solve for evapotranspiration:
$\mathrm{ET}\=PQ$
You will be able to further examine this relationship in the example below.
