Abstract: Since the comprehensive implementation of the watershed ecological protection compensation mechanism, Hunan Province has achieved significant results in improving water environmental quality and other aspects. However, to meet the strategic demands of the Yangtze River conservation and the high-quality development of the Yangtze River Economic Belt in the new era, the current mechanism urgently requires breakthroughs and innovation.This study systematically reviews the operation status and implementation effects of the watershed compensation mechanism in Hunan Province, identifying the core challenges faced by the current compensation system.Based on an analysis of the root causes of these challenges and through the comprehensive application of methods such as policy text analysis, field research, and comparative studies, this research innovatively constructs a provincial assessment index system that integrates water environment, water resources, and water ecology ("three-water overall planning"), and designs an implementation pathway featuring "province-managing-cities and cities-managing-counties" hierarchical management and whole-basin collaborative compensation.This provides comprehensive and systematic theoretical guidance and practical solutions for the the work of watershed ecological protection compensation in Hunan Province.