Based on the requirements of the Regulations on Ecological Protection Compensation and the current practice of the trans-basin horizontal ecological protection compensation system, the existing basin management model based on administrative divisions falts short of the needs of the holistic protection of ecosystems. Against this backdrop, the contractual governance model has gradually emerged as an alternative approach and a key implementation path. Contractual governance regards the construction of a self-enforcing mechanism for contracts as a tool to achieve specific policy objectives or conduct public utility management. Given the extensive practical needs, the establishment of the trans-basin horizontal ecological protection compensation system is constrained by such limitations as insufficient public participation, unclear definition, and limited scope of compensation subjects, inappropriate compensation standards, and a single compensation method, which restrict the effective functioning and efficient operation of the system. Therefore, the improvement of the trans-basin horizontal ecological protection compensation system should focus on incorporating the content of ecological compensation agreements into the scope of proactive disclosure in advance, ensuring the full participation of the public in the drafting and implementation stages of the agreements, appropriately incorporating basin stakeholders such as enterprises and residents into the compensation subjects, scientifically setting compensation standards, and exploring diversified compensation methods, thereby realizing the sustainable development in the trans-basin horizontal ecological protection compensation efforts.