Abstract: Guided by the concept of traditional regional administration, the governments in the watersheds all follow a basic goal of maximizing their own local benefits. Consequently, little attention is paid to common interests of the whole watersheds, which often results in serious conflicts between local governments in the same watershed. It is, therefore, difficult for them to reach a consensus on ecological compensation of the trans-provincial watersheds. The implementation of ecological compensation of a trans-provincial watershed depends on replacement of the concept of regional government administration with that of watershed management and innovation of some relevant mechanisms, including the mechanism of democratic consultation between governments in the watersheds, a multi-subject joint supplying system and selective incentives offered by the central government to local governments.