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The hydrologic, or water, cycle is the continuous, interlinked circulation of water among its various compartments in the environment. Hydrologic budgets are analyses of the quantities of water stored, and the rates of transfer into and out of those various compartments. A simplified hydrologic cycle starts with heating caused by solar energy and progresses through stages of evaporation (or sublimation), condensation, precipitation (snow, rain, hail, glaze), groundwater, and runoff.

The most important places in which water occurs are the oceans, glaciers, underground aquifers, surface waters, and the atmosphere. The total amount of water among all of these compartments is a fixed, global quantity. However, water moves readily among its various compartments through the processes of evaporation, precipitation, and surface and subsurface flows. Each of these compartments receives inputs of water and has corresponding outputs, representing a flow-through system. If there are imbalances between inputs and outputs, there can be significant changes in the quantities stored locally or even globally. An example of a local change is the drought that can occur in soil after a long period without replenishment by precipitation. An example of a global change in hydrology is the increasing mass of continental ice that occurs during glacial epochs, an event that can remove so much water from the oceanic compartment that sea level can decline by more than 328 ft (100 m), exposing vast areas of continental shelf for the development of terrestrial ecosystems.

Estimates have been made of the quantities of water that are stored in various global compartments. By far, the largest quantity of water occurs in the deep lithosphere, which contains an estimated 27×10¹⁸ tons (27-billion-billion tons) of water, or 94.7% of the global total. The next largest compartment is the oceans, which contain 1.5×10¹⁸ tons, or 5.2% of the total. Ice caps contain 0.019×10¹⁸ tons, equivalent to most of the remaining 0.1% of Earth's water. Although present in relatively small quantities compared to the above, water in other compartments is very important ecologically because it is present in places where biological processes occur. These include shallow groundwater (2.7×10¹⁴ tons), inland surface waters such as lakes and rivers (0.27×10¹⁴ ton), and the atmosphere (0.14×10¹⁴ tons).

The smallest compartments of water also tend to have the shortest turnover times, because their inputs and outputs are relatively large in comparison with the mass of water that is contained. This is especially true of atmospheric water, which receives annual inputs equivalent to 4.8×10¹⁴ tons as evaporation from the oceans (4.1×10¹⁴ tons/yr) and terrestrial ecosystems (0.65×10¹⁴ tons/yr), and turns over about 34 times per year. These inputs of water to the atmosphere are balanced by outputs through precipitation of rain and snow, which deposit 3.7×10¹⁴ tons of water to the surface of the oceans each year, and 1.1×10¹⁴ tons/yr to the land.

These data suggest that the continents receive inputs of water as precipitation that are 67% larger than what is lost by evaporation from the land. The difference, equivalent to 0.44×10¹⁴ tons/yr, is made up by 0.22×10¹⁴ tons/yr of runoff of water to the oceans through rivers, and another 0.22×10¹⁴tons/yr of subterranean runoff to the oceans.

The movements of water in the hydrologic cycle are driven by gradients of energy. Evaporation occurs in response to the availability of thermal energy and gradients of concentration of water vapor. The ultimate source of energy for most natural evaporation of water on Earth is solar electromagnetic radiation. Heating from within Earth's mantle and crust that results from radioactive decay supplies the other thermal energy requirements. Solar energy is absorbed by surfaces, increasing their heat content, and thereby providing a source of energy to drive evaporation. In contrast, surface and ground waters flow in response to gradients of gravitational potential. In other words, unless the flow is obstructed, water spontaneously courses downhill.

The hydrological cycle of a defined area of landscape is a balance between inputs of water with precipitation and upstream drainage, outputs as evaporation and drainage downstream or deep into the ground, and any internal storage that may occur because of imbalances of the inputs and outputs. Hydrological budgets of landscapes are often studied on the spatial scale of watersheds, or the area of terrain from which water flows into a stream, river, or lake.

The simplest watersheds are so-called headwater systems that do not receive any drainage from watersheds at higher altitude, so the only hydrologic input occurs as precipitation, mostly as rain and snow. However, at places where fog is a common occurrence, windy conditions can effectively drive tiny atmospheric droplets of water vapor into the forest canopy, and the direct deposition of cloud water can be important.

Vegetation can have an important influence on the rate of evaporation of water from watersheds. This hydrologic effect is especially notable for well-vegetated ecosystems such as forests, because an extensive surface area of foliage supports especially large rates of transpiration. Evapotranspiration refers to the combined rates of transpiration from foliage, and evaporation from non-living surfaces such as moist soil or surface waters. Because transpiration is such an efficient means of evaporation, evapotranspiration from any well vegetated landscape occurs at much larger rates than from any equivalent area of non-living surface.

In the absence of evapotranspiration an equivalent quantity of water must drain from the watershed as seepage to deep groundwater or as streamflow.

Forested watersheds in seasonal climates display large variations in their rates of evapotranspiration and streamflow. This effect can be illustrated by the seasonal patterns of hydrology for a forested watershed in eastern Canada. The input of water through precipitation is 58 in (146 cm) per year, but 18% of this arrives as snow, which tends to accumulate on the surface as a persistent snow pack. About 38% of the annual input is evaporated back to the atmosphere through evapo-transpiration, and 62% runs off as river flow. Although there is little seasonal variation in the input of water with precipitation, there are large seasonal differences in the rates of evapo-transpiration, runoff, and storage of groundwater in the watershed. Evapotranspiration occurs at its largest rates during the growing season and runoff is therefore relatively sparse during this period. In fact, in small watersheds in this region forest streams can literally dry up because so much of the precipitation input and soil water is utilized for evapotranspiration, mostly by trees. During the autumn, much of the precipitation input serves to recharge the depleted groundwater storage, and once this is accomplished stream flows increase again. Runoff then decreases during winter, because most of the precipitation inputs occur as snow, which accumulates on the ground surface because of the prevailing subfreezing temperatures. Runoff is largest during the early springtime when warming temperatures cause the snow pack to melt during a short period of time, resulting in a pronounced flush of stream and river flow.

Some aspects of the hydrologic cycle can be utilized by humans for a direct economic benefit. For example, the potential energy of water elevated above the surface of the oceans can be utilized for the generation of electricity. However, the development of hydroelectric resources generally causes large changes in hydrology. This is especially true of hydroelectric developments in relatively flat terrain, which require the construction of large storage reservoirs to retain seasonal high-water flows, so that electricity can be generated at times that suit the peaks of demand. These extensive storage reservoirs are essentially artificial lakes, sometimes covering enormous areas of tens of thousands of hectares. These types of hydroelectric developments cause great changes in river hydrology, especially by evening out the variations of flow, and sometimes by unpredictable spillage of water at times when the storage capacity of the reservoir is full. Both of these hydrologic influences have significant ecological effects, for example, on the habitat of salmon and other aquatic biota.

Where the terrain is suitable, hydroelectricity can be generated with relatively little modification to the timing and volumes of water flow. This is called run-of-the-river hydroelectricity, and its hydrologic effects are relatively small. The use of geologically warmed ground water to generate energy also has small hydrological effects, because the water is usually re-injecting back into the aquifer.

Human activities can influence the hydrologic cycle in many other ways. The volumes and timing of river flows can be greatly affected by channeling to decrease the impediments to flow, and by changing the character of the watershed by paving, compacting soils, and altering the nature of the vegetation. Risks of flooding can be increased by speeding the rate at which water is shed from the land, thereby increasing the magnitude of peak flows. Risks of flooding are also increased if erosion of soils from terrestrial parts of the watershed leads to siltation and the development of shallower river channels, which then fill up and spill over during high-flow periods. Massive increases in erosion are often associated with deforestation, especially when natural forests are converted into agriculture.

The quantities of water stored in hydrologic compartments can also be influenced by human activities. An important example of this effect is the mining of groundwater for use in agriculture, industry, or for municipal purposes. The best-known case of groundwater mining in North America concerns the enormous Ogallala aquifer of the southwestern United States, which has been drawn down mostly to obtain water for irrigation in agriculture. This aquifer is largely comprised of "fossil water" that was deposited during earlier, wetter climates, although there is some recharge capability through rain-fed groundwater flows from mountain ranges in the watershed of this underground reservoir.

Sometimes industrial activities lead to large emissions of water vapor into the atmosphere, producing a local hydrological influence through the development of low-altitude clouds and fogs. This effect is mostly associated with electric power plants that cool their process water using cooling towers.

A more substantial hydrologic influence on evapotranspiration is associated with large changes in the nature of vegetation over a substantial part of a watershed. This is especially important when mature forests are disturbed, for example, by wildfire, clear-cutting, or conversion into agriculture. Disturbance of forests disrupts the capacity of the landscape to sustain transpiration, because the amount of foliage is reduced. This leads to an increase in stream flow volumes, and sometimes to an increased height of the groundwater table. In general, the increase in stream flow after disturbance of a forest is roughly proportional to the fraction of the total foliage of the watershed that is removed (this is roughly proportional to the fraction of the watershed that is burned, or is clear-cut). The influence on transpiration and stream flow generally lasts until regeneration of the forest restores another canopy with a similar area of foliage, which generally occurs after about 5–10 years of recovery. However, there can be a longer-term change in hydrology if the ecological character of the watershed is changed, as occurs when a forest is converted to agriculture.

See also Alluvial systems; Aquifer; Artesian; Atmospheric composition and structure; Hydrogeology; Hydrologic cycle; Hydrostatic pressure; Hydrothermal processes; Stream capacity and competence; Stream piracy; Troposphere and tropopause; Wastewater treatment; Water pollution and biological purification; Water table; Water