The transfer payment policy in national key ecological functional areas has been implemented since the "12th Five-Year Plan", but the effect of this policy on the ecosystem, especially in water conservation type national key ecological function areas, is far from being clearly understood. The objective of this study is to evaluate the phased implementation effect of transfer payment policy in the national key ecological function areas. In this research, water balance method was employed to analyze the water conservation function and its changes in 2011 and 2019. The area and the quality of the ecosystem in 2011 and 2019 were evaluated using land-cover data and meteorological data. The results showed that since the implementation of the transfer payment policy in 2011:(1) the capacity of water conservation in the national key ecological function areas of water conservation presents a spatial distribution trend that gradually increases from the northwest to the southeast. In 2019, the capacity of water conservation in the national key ecological function areas of water conservation increased significantly compared with 2011. (2) The area of forests in key ecological function areas for water conservation has increased, and wetlands has effectively restored in the national key ecological function areas of water conservation from 2011 to 2019. (3) The quality of the ecosystem in the water conservation type national key ecological function areas has improved, and the average vegetation coverage has increased, showing a trend of high distribution in the northeast and south central and low in the northwest from 2011 to 2019. Overall, the implementation of the transfer payment policies, such as natural forest protection, returning farmland to forest, returning grazing land to grass and other projects, have played a positive role in improving the water conservation function of forests and grassland ecosystems in the national key ecological function areas of water conservation. However, we should pay enough attention to a small number of water conservation type national key ecological function areas where water conservation functions have declined, and strengthen ecological protection to avoid the degradation of ecosystem services. Therefore, it is possible to control the disorderly expansion of cities, reduce the area of bare land, increase the area of forest and grassland wetland, and improve the forest structure, there by improve the water conservation function and reflect the benefits of the use of transfer payment funds. For areas where the ecological environment has significantly improved, the central government should give appropriate rewards.