First, in Section 2.3.1 general concepts of the physical processes of generation, dissipation and nonlinear wave-wave interactions that are implemented in SWAN are outlined. Next, complete expressions for these physical processes are given in subsequent sections. Apart from these basic processes, a number of supplemental processes are discussed separately: wave dissipation due to vegetation (Section 2.3.5), wave dissipation by sea ice (Section 2.3.6), and the scattering of waves by irregular seabed (Section 2.3.7). Finally, for completeness, the first- and second-generation formulations as employed in SWAN are outlined in Section 2.3.8.