Abstract:The equilibrium condition between supply and demand of ecosystem services in a watershed was discussed in the paper based on the marginal analysis. It was proved that the lower limit of ecological compensation standard is the sum of direct cost and opportunity cost. Theoretically if the compensation standard less than this limit, ecological compensation could not achieve the purpose to encourage the action of ecological conservation and environmental protection. Based on analysis above, current accounting scope and calculation method of direct cost and opportunity cost in watershed ecological compensation were summarized and the existing problems were analyzed. The common calculation framework and method of direct cost was put forward. Moreover, a classification-based method to account opportunity cost was set up to improve the accuracy, scientificity and acceptability in determination of watershed ecological compensation standard.