Agricultural non-point source pollution (ANSP) has become one of the main sources of pollution in water source areas. An effective solution to this problem is the use of ecological compensation to encourage rural households to adopt agricultural pollution control measures. This study aims to answer two questions: How much compensation should be given to encourage rural households in water source areas to participate in ANSP control? What factors will influence their participation? In this study, paddy rice planting in water source area has been used as an example aiming to answer these questions. This study used the random parameter logit (RPL) model with survey data from 632 rural households in the Qinba water source area to empirically analyze rural households’ willingness to accept compensation for ANSP control and the influencing factors of this willingness. From this information, the compensation standards for ANSP control in a water source area were calculated. The results show that (1) compensation had a significant incentive effect on rural households’ willingness to control ANSP. The marginal compensation standard for reducing the use of fertilizer and pesticide was $3.40/ha and $2.00/ha, respectively. The compensation standard for not applying chemical fertilizer and pesticide at all was $540.23/ha. (2) There was heterogeneity in rural households’ preference for ANSP control compensation policies. Rural households characterized by younger residents, higher family income, higher perception of the ecological benefits, and higher perception of government policy were more willing to participate in the compensation policy. It is suggested that rural households showed a strong preference for ANSP control policies by considering both of their economic losses and ecological benefits. Our study contributes to the literature by enriching the evaluation method in providing references for the compensation of ANSP control policies

Ecological compensation is an important means for controlling agricultural nonpoint source pollution, and compensation methods comprise an essential part of the compensation policy for mitigating this form of pollution. Farmers’ choice of compensation methods affects their response to compensation policies as well as the effects of pollution control and ecological compensation efficiency. This study divides ecological compensation methods into two distinct philosophies—the “get a fish” method (GFM) and “get a fishing skill” method (GFSM)—based on policy objectives, to determine farmers’ choice between the two methods and the factors influencing this choice. Furthermore, by analyzing survey data of 632 farmers in the Ankang and Hanzhong cities in China and using the multivariate probit model, the study determines farmers’ preferred option among four specific compensation modes of GFM and GFSM. The three main results are as follows. (1) The probability of farmers choosing GFM is 82%, while that of choosing GFSM is 51%. Therefore, GFM should receive more attention in compensation policies relating to agricultural nonpoint source pollution control. (2) Of the four compensation modes, the study finds a substitution effect between farmers’ choice of capital and technology compensations, capital and project compensations, material and project compensations, while there is a complementary relationship between the choice of material and technology compensations. Therefore, when constructing the compensation policy basket, attention should be given to achieving an organic combination of different compensation methods. (3) Highly educated, young, and male farmers with lower part-time employment, large cultivated land, and a high level of eco-friendly technology adoption and policy understanding are more likely to choose GFSM. Hence, the government should prioritize promoting GFSM for farmers with these characteristics, thereby creating a demonstration effect to encourage transition from GFM to GFSM.