This paper describes the development and testing of the hypothesis that the long-term water balance is determined only by the local interaction of fluctuating water supply (precipitation) and demand (potential evapotranspiration), mediated by water storage in the soil. Adoption of this hypothesis, together with idealized representations of relevant input variabilities in time and space, yields a simple model of the water balance of a finite area having a uniform climate. The partitioning of average annual precipitation into evapotranspiration and runoff depends on seven dimensionless numbers: the ratio of average annual potential evapotranspiration to average annual precipitation (index of dryness); the ratio of the spatial average plant-available water-holding capacity of the soil to the annual average precipitation amount; the mean number of precipitation events per year; the shape parameter of the gamma distribution describing spatial variability of storage capacity; and simple measures of the seasonality of mean precipitation intensity, storm arrival rate, and potential evapotranspiration. The hypothesis is tested in an application of the model to the United States east of the Rocky Mountains, with no calibration. Study area averages of runoff and evapotranspiration, based on observations, are 263 mm and 728 mm, respectively; the model yields corresponding estimates of 250 mm and 741 mm, respectively, and explains 88% of the geographical variance of observed runoff within the study region.

The differences between modeled and observed runoff can be explained by uncertainties in the model inputs and in the observed runoff. In the humid (index of dryness 1) parts, all of the runoff is caused by variability of forcing over time. Contributions to model runoff attributable to small-scale spatial variability of storage capacity are insignificant throughout the study area. The consistency of the model with observational data is supportive of the supply-demand-storage hypothesis, which neglects infiltration excess runoff and other finite-permeability effects on the soil water balance.