When discussing finance, it is important to understand the concept of a watershed. A watershed refers to the land area that drains water into a specific body of water, such as a river, lake, or reservoir. This can have a significant impact on the water quality and quantity in that body of water. Essentially, a watershed is the natural boundary that determines where water flows and how it is distributed. Understanding the concept of a watershed is crucial in understanding the intricate workings of finance and its impact on the environment.