Has PFS Reached Beyond the Three Priority Fields?

A research note from the Public Asset and PPP Lab (ISVD-LAB-005). On how far pay-for-success has spread across fields, read from the FY2025 implementation survey and the action plan decided in March 2026.

Between December 2025 and February 2026 the Cabinet Office surveyed every local government in Japan and compiled the results at a 90.9% response rate. At the end of FY2025 there were 379 PFS projects[1], 42 more than a year earlier.

By field, the distribution leans heavily towards the three the government designates as priorities: health and medicine, long-term care, and reoffending prevention.

The text gives counts for six fields, totalling 332. The overall total is 379, leaving 47. The breakdown of those 47 does not appear in the text, only in a figure. Anyone tracking the spread across fields from outside loses part of the picture at that point.

Environment stands at 2, and the report states explicitly that this is unchanged from the previous year. Urban development stands at 24, up by 2.

Widening the fields has been policy for two periods

The action plan decided by the inter-ministerial liaison conference on 25 March 2026 sets the approach for FY2026 to FY2028. It says to keep accumulating cases centred on the three priority fields while extending into urban development, promotion of social participation and support activities, employment support, environment and other areas.

For urban development, the Cabinet Office and the Ministry of Land, Infrastructure, Transport and Tourism are to encourage adoption by enriching the handbook and presenting flagship cases.

The common guidelines list three field-specific handbooks: health, medicine and long-term care (Ministry of Health, Labour and Welfare and Ministry of Economy, Trade and Industry); reoffending prevention (Ministry of Justice); and introducing social impact bonds in urban development (Ministry of Land, Infrastructure, Transport and Tourism). Environment and employment support have no handbook in that list.

Handbooks and counts do not line up

The explanation that a handbook produces spread does not hold, because the figures do not fit it.

Reoffending prevention has a handbook and 7 projects; employment support has none and 15. Lining up the handbooks does not explain the order of the counts.

The concentration in long-term care and health is better explained by the depth of prior cases than by handbooks. Where that depth came from cannot be established from published material alone.

What the previous plan achieved

The new action plan records the results of the previous one, covering FY2023 to FY2025. This is the most important passage for thinking about field expansion.

The project target was met; the organisation target fell short by half. What grew was the number of projects, not the number of local governments starting one.

Flagship projects are also recorded. In FY2023 one project in the environment field, setting a highly replicable indicator for encouraging household energy saving, was carried out. One of the two environment projects can be read as that flagship case.

The government's own concern appears too. More than half of the projects being run are single-year contracts. Being multi-year is not in itself superior, but results that address a social issue generally take a medium to long horizon. Given how many are single-year, the plan says, there is concern that essential PFS projects, those with a fully worked-through hypothesis and analysis of the route to solving the issue, have not spread sufficiently.

Debates about field expansion are usually framed as which field to open next. What the published figures show is a different axis.

Counts rise; adopting bodies do not. The overall number grows as the same local governments add a second and third project, while first-time adopters fall short of target. The gap between the two achievement rates in the previous plan says exactly that.

What happens if only the fields are widened under that structure? Local governments that already have experience carry a familiar method into another field. The field column fills; the base of practitioners does not widen. That one of the two environment projects was singled out nationally as a flagship is the other side of how thin that field is.

The new action plan has changed how it sets targets.

All three are framed around what is new, shifting from the previous plan's count of projects in the priority fields towards measures of novelty. Requirements for flagship projects have also been written down. Type-A has seven: results-based payment tied to outcome indicators, a multi-year project, open sounding or an open call, advice and supervision by a specialist body, a rigorous evaluation design, estimation of benefits, and a project scale of 50 million yen or more. Type-B has five, the first four plus setting a highly replicable outcome indicator.

That multi-year delivery is among the requirements matters. Against a reality where more than half are single-year, the requirement pushes from the other direction.

First, the breakdown of the 47 is not in the text. Tracking field-level spread from outside means reading a figure. Where widening fields is a stated policy goal, field counts belong in the text.

Second, how should the two environment projects be read? All that exists is the fact that the number has not moved. Whether no project was shaped, or projects were shaped and did not proceed, cannot be distinguished from published material.

Third, what does the first-time-adopter indicator measure? The target of 75 bodies is higher than the previous 60, but the previous result was 28. Raising a target and being on course to meet it are different things. How that gap is to be closed is not written in the plan. Widening fields and increasing first-time local governments look like two designs that need to be set out separately.

Related research notes

• The two seats PFS sets aside for supporters（このサイトの記事）. Positions that provide no service
• Pricing what cannot be measured（このサイトの記事）. Building a willingness to pay
• The structure behind 9% PFS adoption（このサイトの記事）. Three walls that stop local governments

References

Status of PFS Projects in Japan — Cabinet Office (2026)

Action Plan for Promoting Pay-for-Success Contracting (decided 25 March 2026) — Inter-ministerial Liaison Conference on PFS (2026)

Common Guidelines on Pay-for-Success Contracting (revised February 2024) — Cabinet Office (2024)