Abstract: To solve the imbalance of benefit-loss relationship among different regions of transboundary water environment management in Taihu Lake Basin, the subject and object of ecological compensation for watershed flow are determined by means of stakeholder analysis. The input of water environment management of important rivers and lakes across provinces and cities is used to calculate the compensation standard. Three indicators of waste water discharge, water consumption and per capital GDP, are proposed to calculate the financing of each province or city. Funds allocation is determined in consideration of pollution control and environmental protection compensation. Using 2017 as the base year, the fund raising and allocation calculation of watershed water flow ecological compensation scheme are carried out. The compensation standard is 3 billion yuan, in addition to the central government guiding fund of 1.5 billion yuan, Jiangsu, Zhejiang and Shanghai raise 709 million, 300 million yuan and 591 million yuan, finally the total funds are 1.243 billion, 813 million and 945 million yuan funds, respectively. The proportion of capital contribution of each province or city is basically corresponding to its area and economic development status in the basin. The amount of funds allocated by provinces or city basically coincides with their spatial distribution in the upstream and downstream of the basin and their water environment management tasks.