Abstract: As an outer financial incentive mechanism for transforming non-marketing environment value to local participants by providing ecosystem services, ecological compensation and the related ecological effects and sustainability have attracted considerable global effort. There has therefore been the expressed need to fully and objectively evaluate the effects of ecological compensation. As improving ecological and environmental systems has remained the core effort of conversion of farmlands into forestlands in China, this study used the farmland conversion into forestland project to survey farmers in Zhangye Prefecture of the Heihe River Basin. As evaluation studies were often limited by various uncertainties under fuzzy comprehensive evaluation, peasants' perception on ecological compensations in terms of social, economic and ecological effects was used to effectively and quantitatively analyze ecological compensation. The effect of farmers' perception on ecological compensation was obtained using the least squares method. The study showed that the index of farmers' perception on ecological compensation was 3.02. Among the ecological compensation effects, the index for ecological effect was highest (3.11), followed by that for social effect (3.06), while the index for economic effect was lowest (2.55). This suggested that ecological compensation improved the local ecological environment, alleviated poverty, increased employment opportunities, promoted economic development, etc. While farmers' educational level, living conditions and annual income were positively correlated with social, economic and ecological effects of ecological compensation perceived by farmers, farmers' age was negatively correlated with these factors. In addition, farmer's social status had a significant impact on their perceived ecological effects. Among the factors of perceived social effects, farmers' educational level contributed the most to farmers' social perception, with a correlation coefficient of 1.067. This was followed by farmers' living conditions, while farmers' age least influenced farmers' social perception. Among the factors of perceived economic effect, farmers' educational level contributed the most to farmers' economic perception, with a correlation coefficient of 1.073. This was followed by farmers living conditions and annual income, while farmers' age least influenced farmers' economic perception. Among the factors of perceived ecological effect, farmers' educational level contributed the most to farmers' ecological perception, with a correlation coefficient of 2.612. This was followed by farmers living conditions, while farmers' social status least influenced farmers' ecological perception.