The document discusses water and energy budgets. It explains that a budget represents the variation of a given quantity within a control volume over a time interval, and is the algebraic sum of inputs and outputs. It provides examples of water budgets for soil volumes and atmospheric layers, accounting for precipitation, evapotranspiration, runoff and other fluxes. It also discusses the components of an energy budget, including net radiation, heat conduction, heat of vaporization and more.