Abstract: The ecological compensation mechanism of Xin'an River basin is a property rights innovation that introduces market mechanisms into local environmental collaborative governance. The basin ecological compensation policy promotes ecosystem services and enhances green water resources utilization efficiency to become an important focus of current ecological civilization construction. This paper used panel data of 27 prefecture-level cities in Anhui Province and Zhejiang Province from 2007 to 2020 to construct an evaluation index system for green water resources utilization efficiency for Xin'an River basin. The effects of ecological compensation on green water resources utilization efficiency was empirically tested, by comprehensively using the super-efficient SBM model and differences-in-differences method. The study found that the policy significantly contributed to the improvement of green water resources utilization efficiency in the pilot area, and this conclusion still held after a series of robustness tests. Moreover, the policy was observed to have little effect in the upstream area, but a significant effect in the downstream area, and the positive effect became larger and larger with time. In terms of the influential mechanism, the policy would promote the green water resources utilization efficiency through the path of scientific and technological innovation. A number of suggestions were proposed in this paper. These included the in-depth promotion of basin ecological compensation policy, the encouragement of building a dynamic cooperation mechanism in upstream and downstream areas, the increase of scientific and technological innovation and a strong interactions with other supporting policies to support the overall sustainable development of the basin.