The necessity of improving the compensation mechanism is illustrated from three aspects, such as leaving - behind issues by old system, the need of constructing harmonious society and water conservancy project. On the basis of that, the paper confirms the principle and initial suppose of compensation mechanism, puts forward multi - way to form compensation mechanism, which include land - for - safeguard, construction of social security system, interest distribution of increment land value, immigrant stratagem for the environment of reservoir, resettlement of the transmigrant ; the priority principle of beneficial regions, support by place to place, reducing the one - off investing pressure, disbursing the compensation of land stock by stages and other viable kit of mechanism. Then it can analyze, measure and calculate the reforming cost of compensation mechanism, identify the reforming risks from the linkage of new policy and former policy and the durative social security mechanism for the transmigrants, Finally, it puts forward the way to dissolve the reforming cost.