The ecological protection of the watersheds in China is being confronted with a lot of problems such as soil and water erosion, water pollution at present. Therefore watershed eco-compensation is becoming a question of common interest. Based on the analyses of the major problems and their origins in the watershed protection in China, the paper discusses the concerned policies including relative rules and laws, financial policies and water right transaction policies. Simultaneously the paper reviews the practices carried out in China, including the ecological construction project in the western China, the trans-provincial eco-compensation practice and the small watershed eco-compensation practice. According to the present situation of eco-compensation practices and the future policy requirement, this paper finally puts forward four key problems to be solved in the watershed eco-compensation of China in the future.
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