We examined the extent to which photolytic and nonphotolytic decomposition rates of dissolved organic carbon (DOC) could account for the annual retention or loss of DOC inputs in lakes (retention is equal to stream inputs plus atmospheric inputs minus stream discharge which is equivalent to storage in sediments plus degassed to atmosphere). Losses of DOC inputs to sediments and the atmosphere were large, averaging 38 to 70% of total inputs in seven study lakes between 1980 and 1992. Up to 50% of stream DOC was lost as inorganic C when exposed to solar radiation during 6 to 11 day surface exposures in bottles whereas lake DOC concentration was unaffected by solar radiation. Stream DOC loss was significantly less in the dark suggesting a low microbial consumption rate. Photodecay constants, extrapolated to each of the study lakes after correction for in situ mixing conditions and extinction of UVA and UVB, were similar to corresponding mass balance rate constants representing sediment storage and losses to the atmosphere. This suggests that photodecay is potentially large enough in situ to account for all of the DOC losses to the atmosphere and sediments in the low DOC lakes (4 mg L-1). The mass balance and photodecay approaches employed in the study of carbon budgets show that UV degradation is probably an important mechanism in transfer of stream DOC to the sediment particulate C pool and to the atmosphere.¿ 1997 American Geophysical Union