The ecological compensation mechanism for the Qiandaohu Lake and the Xin'an River Basin

as China's first cross-provincial horizontal ecological compensation pilot

has developed a unique institutional system and practical pathway after over a decade of exploration. This paper traces the theoretical evolution of ecological compensation from the internalization of externalities to payments for ecosystem services

analyzing the institutional design

funding arrangements

and implementation outcomes of four phases of the Xin'an River pilot. This study reveals a transition from a single fiscal compensation model to a diversified

integrated compensation framework. The Xin'an River model establishes upstream-downstream benefit-sharing mechanisms through institutional designs such as water quality wager agreements and tiered subsidies. During the first 3 pilot phases(covering 3 cities and 10 counties)

cumulative compensation investments totaling 5. 7 billion yuan ensured that the watershed's water quality met standards for 12 consecutive years. The fourth pilot phase expands the compensation scope to 4 cities and 34 counties~/districts

establishing a GDP-linked growth mechanism for funding adjustments. Innovative practices such as the Qiandao Lake Water Fund

Liangshan Bank

and easement rights reforms integrate public welfare trusts

green finance

and community governance

promoting the realization of ecological product values.This mechanism provides valuable insights for enhancing China's ecological compensation system and fostering coordinated regional development.