The study of the evolution mechanism of carbon budget and carbon compensation in the transformation process of production-living-ecological space is of great significance for the low-carbon use and optimal management of territorial space. This paper analyzes the theoretical logic of the transformation of production-living-ecological space and the spatial and temporal evolution of the carbon budget, explores the leading causes of the imbalance between carbon source and carbon sink and the correction mechanism, and conducts an empirical study based on the example of Southwest China. The results show that (1) The transformation of production-living-ecological space has contributed to the spatial-temporal evolution of the carbon budget while reshaping the spatial functions. It has also aggravated the mismatch of space resources and the carbon budget imbalance due to externality. Carbon compensation is an essential mechanism for correcting the carbon budget imbalance. (2) From 2005 to 2020, the rapid transformation of production-living-ecological space in the southwest region, with the industrial production space and urban living space crowding out the agricultural production space, grassland ecological space, and forest ecological space to realize rapid growth, has exacerbated the imbalance of the regional carbon balance, with the carbon balance rate falling from 29.57% to 17.94%. Carbon emissions from production space are dominated by industrial carbon emissions, which are overgrowing and declining but have not yet peaked. Residential carbon emissions are increasing and then decreasing, with the proportion of urban and rural carbon emissions increasing. Ecological space carbon sinks are dominated by forest carbon sinks, which grow and then fall, with a slight overall increase. (3) Scale effect dominates carbon emissions. The southwest region plays a substantial role in maintaining the national carbon balance, as it is a region that receives carbon compensation, with a proposed amount of 25.997 billion yuan of carbon compensation to be accepted. At the city level, there are 38 carbon compensation compensation areas, such as Ganzi and Aba, and 9 carbon compensation payment areas, such as Neijiang and Qianxinan. 
 

transformation of production-living-ecological space; carbon budget; carbon compensation; Southwest China