Abstract:Ecological compensatory mechanism is an important approach to regulate the balance between ecological conservation and regional economy, as a consequence of which promotes regional sustainable development. As an important component of ecological screen of the upper reaches of Yangtze River, the upper reaches of Minjiang River plays a significant role in conserving water source, nursing biodiversity, and mitigating climate change. As yet, few reports have been published on ecological compensatory mechanism of this region, which is difficult to make needs of ecological screen of the upper reaches of Yangtze River. Therefore, present ecological compensation policy, the decisions and processes of compensation body (government) and object (ecological conservator and constructor) of the upper reaches of Minjiang River were here analyzed to provide with scientific basis for watershed management and by a case from conversion farmland to forests, employing the method of game theory model. In long term, the effects of ecological compensation policy did not depended on the compensation standard, implying that the approach only through improving the compensation standard could not make ecological constructor or ecological conservator protect the environment. Year number of ecological compensation played a crucial role in improving the effects of ecological compensation policy in the studied region, as a consequence of which more attentions should be given to the year number of ecological compensation in making a decision of ecological compensation policy. The levels of local tertiary industry development and the income of labor which was ecological constructor and conservator directly influenced ecological construction project. An important strategy of ecological compensation policy was to increase employment opportunities for farmer by establishing the corresponding measures. However, diverse ecological compensation approaches needed to be studied deeply in the future.