Water resources in China’s river basins are scarce, and the pollution that shrouds them is serious. Constant disputes have emerged between the upstream and downstream sectors due to the contamination of river basins. Moreover, China’s research on ecological compensation mechanisms and compensation standards is still immature at present. Thus, this study establishes a compensation model and introduces the compensation coefficient K, including the compensation coefficient K1 between the upstream and downstream governments and the compensation coefficient K2 between the upstream government and the central government. This paper adopts the Bargain Game Model and obtains the value of K2 through the decision-making process between the central government and the upstream local government. In addition, amendment to the final offer arbitration law is used to acquire the value of K1 by proving the existence and uniqueness of equilibrium. Then, this paper takes the Taohe River Basin as an example and combines the compensation model to analyze, using the simplified compensation function to determine the amount of emission pollution from upstream to downstream and the compensation that upstream should receive.

This paper compares and analyzes the effects of different amounts of government subsidies and subsidy patterns on water supply, pricing, and profit distribution, and takes water diversion project supply chain composed of water transfer company and the water work as the study object, using financial accounting method innovatively, establishing non-cooperative and cooperative game models of two under government subsidies. The results show that as the number of subsidies increased, the optimal amount of water supply and the profits increased, but the price of water work decreased. When the amount of subsidy stays same, the price of water plant also stays same. However, the price of the water transfer company is constantly changing, the higher the proportion of subsidies it received, the lower the price. In terms of data, the authors take a practical example – the Tao River Water Diversion Project to analyze. This paper’s limitation is that the conclusion is based on a single water transfer company and a single water plant as the research object. However, the actual situation of the water transfer project is that a water transfer company faces a complex supply chain network formed by many water plants and farmers’ water users’ associations.