When the lidar pulse is transmitted out of the ALB system, it interacts with various environmental regions from the time of transmission until the pulse is reflected from the seafloor and received back at the ALB detector. Propagation of the lidar pulse, the change in its shape and distribution, and the light returned to the detector all depend critically on the inherent optical properties (IOPs) of the atmosphere, water surface, water column and bottom. The more descriptive apparent optical properties (AOPs) are also useful for characterizing the limits of penetration of the lidar in terms of perceived water quality. In this chapter, the contributions of each of the main environmental regions and the key optical properties associated with the regions are defined. Optical concepts are briefly described here to explain the changes that a transmitted laser pulse undergoes passing through the environmental regions. These concepts will be used throughout the following chapters.