<p>The core idea of Not in My Back Yard (NIMBY) compensation revolves around offsetting the environmental impacts borne by residents through compensatory measures, thereby addressing the issue of public value failure efficiently. This study offers a novel approach to mitigating NIMBY (Not in My Backyard) conflicts in environmental governance projects through “technical compensation” measures. Unlike traditional economic or institutional compensation, technical compensation focuses on enhancing residents’ living environments and ecological conditions. By utilizing evolutionary game theory, this research introduces a tripartite game model that analyzes the strategic behavior of governments, enterprises, and residents. Through extensive case tracking and numerical simulations, it is demonstrated how factors such as government regulatory intensity, penalties for enterprises’ non-compensation, and rewards for residents’ oversight significantly influence the strategic choices and benefit distribution among the three parties. The findings demonstrate how technical compensation mechanisms can effectively alleviate NIMBY conflicts by incentivizing enterprise compliance and promoting resident oversight, providing a fresh perspective on multi-stakeholder cooperation in environmental governance. It is recommended that optimizing governance mechanisms starting from a logical chain of stakeholders’ interests, key influencing factors, governance strategies, and supportive measures in water environment management can fundamentally address the difficulties of cooperation among stakeholders. These insights offer practical implications for improving NIMBY conflict resolution in China’s urban development projects.</p>