This paper discusses a methodology that has been developed to construct a pathogen budget for drinking water watersheds, taking into consideration pathogen origin, deposition, inactivation and movement within a watershed. These processes can be described in terms of "stocks" (pathogens) and "flows" (movement of stocks). In South-Eastern Australia, the majority of pathogen loads into major tributaries occurs during rainfall events so in-stream resuspension may not be important. In contrast, during dry weather the transit time within the studied watershed was sufficiently long such that in-stream processes became important. Total pathogen unit (TPU) budgets were constructed for the parasitic protozoans Cryptosporidium and Giardia. This approach not only enables water utility managers to identify those watershed segments that are contributing the greatest load of pathogens, but also where management options should be most effective. With improved knowledge of pathogen ecology this approach can be further refined to provide budgets of infectious pathogen units (IPU). Includes 2 references, table, figure.