Watersheds provide a variety of ecological services including soil and water conservation,carbon sequestration and biodiversity protection.However,activities in a fast-growing economy significantly impact the supply and demand of these watershed services.To mitigate these impacts,the concept of payment for environmental and ecosystem services from watersheds has emerged in global academic and policy circles.The governments and academic communities in China have increasingly described payments for ecological services from watersheds with the concept of watershed eco-compensation as it is urgent to protect watershed ecosystems.Watershed eco-compensation has proved to be one of the most economically effective means of solving environmental problems of watersheds to be adopted by the Chinese government.This paper presents an objective analysis of the Chinese market for watershed ecosystem services,including supply and demand for the services.It also summarizes Chinese policies on watershed eco-compensation,including relevant laws and regulations and fiscal policies.In addition,it presents a review of Chinese practices in watershed eco-compensation,including the analysis of an ecological construction project in Westem China,inter-provincial watershed cco-compensation practices and plans,and payment for ecological services at the provincial and small watershed levels.Finally,it summarizes the key components of the process of payment in Chinese watershed eco-compensation.This discussion forms the basis of concluding suggestions for ecosystem services compensation and ecological protection in the large scale river basin.