To rationalize the ecological relation and benefit-based relation between upstream and downstream areas, and to boost a sustainable development of the whole river basin, it's proposed to establish a rational ecological compensation mechanism and to compensate the upstream areas by the nation and the downstream areas. Based on the analysis of ecological values and main problems in Chishui River basin, the principles of ecological compensation are put forward, and an initial framework for compensation mechanism is proposed. Approaches and methods of eco-compensation and the supporting measures are also presented.