Abstract A conceptual model of catchment water balance developed in the companion paper (Ponce and Shetty, J. Hydrol., 173: 27–40, 1995) is used to simulate changes in runoff and baseflow with annual precipitation. The model is based on the sequential separation of annual precipitation into surface runoff and wetting, and wetting into baseflow and vaporization. Runoff is the sum of surface runoff and baseflow. Runoff gain is defined as the derivative of runoff coefficient with respect to precipitation. Baseflow gain is defined as the derivative of baseflow coefficient with respect to precipitation. Catchment data show that runoff and baseflow gains are always positive. Runoff gain reaches a peak value at a threshold precipitation P rt ; baseflow gain reaches a peak value at a threshold precipitation Pa,. Analysis of the runoff and baseflow functions sheds additional light on the nature of the competition between runoff and vaporization, and baseflow and vaporization.