Lakes provide important resources to sustain human livelihoods and economic development. Lakes have significant ecological, cultural, and economic value in China as they supply drinking water, valuable fish species, regulate local climates, and provide scenic landscapes for leisure and tourism. However, they are one of the most extensively and rapidly altered ecosystems in China. Ecosystem services offer a holistic framework to link ecological and economic outcomes to manage the interconnectivity between ecosystems and human welfare. The ecosystem services concept seeks to clarify tradeoffs among ecosystem services and other social demands to improve lake ecosystem management. In recent decades, scientists have increasingly recognized the relevance of ecosystem services in policy analysis. In China, policy makers want to use ecosystem services in ecological compensation programs where consumers of ecosystem services pay suppliers for the benefits. However, technical challenges in separating intermediate ecosystem services from final ecosystem services to quantify tradeoffs are hindering the measurement and valuation of ecosystem services for lake management. Chinese scientists are confronted with the challenge of creating credible and legitimate ecosystem service values to inform policy makers on designing effective ecological compensation programs. A transdisciplinary approach is fundamental to measuring ecosystem services to understand how biological mechanisms of lake ecosystems support final ecosystem service flows. In the present study, we identify methods to measure lake ecosystem services and the gaps in current methods, and propose using ecosystem service flow mechanisms and beneficiary analysis to identify final ecosystem services, and ecological production functions to characterize the relationships between management choices, ecological characteristics, and economically valuable final ecosystem services. Ecological production function can help advance ecosystem services quantification to clarify tradeoffs for incorporating ecosystem services into lake management in China.