Objective/Meaning As one of the important policy tools for China to manage the ecological environment, the policy of ecological compensation for river basins plays a significant role in protecting the ecological environment of river basins and promoting green development in regions.

Methods/Procedures This paper studies the pollution reduction and emission reduction effects and mechanisms of the basin ecological compensation policy. The article first conducts theoretical analysis, and then takes agricultural-related enterprises as the research object, using the China Industrial Enterprise Database and the Enterprise Pollution Emission Database to construct a multi-period difference-in-differences model to empirically test the impact and mechanism of the basin ecological compensation policy on enterprise pollution emissions.

Results/Conclusions The research finds that the basin ecological compensation policy significantly reduces the industrial wastewater discharge level of agricultural-related enterprises. The mechanism test shows that the basin ecological policy can encourage enterprises to carry out technological innovation, and at the same time alleviate the financing constraints of enterprises, promoting enterprises to invest more funds in environmental protection, thereby reducing pollution emissions and realizing the "Porter Hypothesis". However, there is still room for improvement in the basin ecological policy, especially that the basin ecological compensation policy increases the distance between the government and enterprises, prompting enterprises to move to the boundary and expand pollution emissions. The article finally puts forward corresponding policy suggestions.