Demystifying environmental sandboxes: What are they, and what aren’t they?

By Phoebe Higgins and Harry Huntley

In the midst of broad efforts to “cut green tape” for nature-based projects, a concept getting increased attention—from the Chesapeake Bay to the Puget Sound, from advocates to state and local governments—is regulatory sandboxes. We first wrote about he idea of applying regulatory sandboxes to nature back in 2019 because we saw them as a tool to bring innovation and prototyping to the restoration of nature. Given the current heightened interest, we thought it would be helpful to demystify the sandbox concept by ensuring everyone understands what a sandbox is and what it’s not. Specifically, how is a sandbox for nature different from a waiver or a pilot or even other kinds of sandboxes?

What is a Regulatory Sandbox?

This definition from the Government of Canada is a good one: “A regulatory sandbox is a facility, created and controlled by a regulator, designed to allow the conduct of testing or experiments with novel products or processes prior to their full entry into the marketplace.” Key terms in this definition are “created and controlled by a regulator.” Regulatory sandboxes are meant to have oversight by regulatory bodies, even though they involve operating in a space that would typically be considered outside of regulation. Therefore, anyone who is interested in setting up or participating in a sandbox should solicit the support, leadership and buy-in of the relevant regulator. Another key feature that is not expressly called out in this definition:  sandboxes emphasize testing and experimentation, always for purposes of improving upon new approaches before they are allowed to operate within the mainstream regulatory environment.

Sandboxes vs. exemptions

Sandboxes always involve an exemption (aka waiver) to a rule, because they are established for the express purpose of inviting testing of new strategies and approaches that fall outside of the regulatory space, and that are intended to someday become legal/accepted under regulation. But sandboxes include much more than just an exemption. Sandboxes are designed to support learning and adapting within a controlled testing environment. Within a sandbox, exemptions are only issued for a particular entity or entities and for a particular time. If an entity shows positive results in the sandbox, policymakers may change or clarify regulations to exempt similar activities for anyone at any time. For example, exempted fishing permits allow testing of certain unlawful types of fishing gear that, if proven successful at avoiding environmental harm, have a pathway to become legal. 

On the other hand, established exemptions are ongoing legal carveouts available to anyone who is eligible, but they are not monitored or adaptable. For example, farming practices receive a permanent exemption from Clean Water Act rules. This exemption was not developed in order to incentivize farmers to test new approaches that would potentially bring them into compliance with the Clean Water Act—they are simply always going to be considered exempt from the rule.

There are some cases where a statutory exemption is granted for a limited time but does not otherwise have features in common with a sandbox. For example, California offers an exemption from the state’s environmental review process (CEQA) for ecological restoration projects, but the legislation setting up this exemption called for it to sunset, or be renewed, in 5 years.

Sandboxes vs. pilots

We’ve been asked about the difference between sandboxes and pilots or demonstration projects. Here is where the regulatory exemption is important:  pilot projects do not by definition require a waiver from rules. They might still be about testing novel approaches, and learning and adapting, but they can do all of that within existing regulations. Furthermore, sandboxes are designed to facilitate quick testing and learning. Pilots do not come with built-in time pressure; they might involve lengthy application processes or take a long time to show results. Finally, pilots or demonstrations do not always come with a plan for what happens next. Sandboxes, on the other hand, anticipate that sandbox participants will want to continue applying any successful approaches beyond the term of the sandbox, and that they will need a clear pathway to regulatory approval. Participants enter the sandbox with this ‘exit strategy’ in mind.

Pilots might also come with government funding. For instance, an existing cover crop program might create a “multispecies pilot,” in which a small subset of farmers are paid more to plant tillage radish and clover over winter, in addition to their typical rye. That doesn’t require a waiver from any rule, because no one was ever regulating what the farmer could plant. It’s saying “What if we tried spending some money in a new way?” Sandboxes, in contrast, do not provide the funding to make an activity happen; they just create the exception to one or more regulations, which then allows a project—funded in whatever way, public or private—to occur. 

More distinguishing features of sandboxes

Dedicated staff support:

Sandboxes usually come with dedicated staff whose job is to support sandbox participants by maintaining an open and adaptive relationship. These staff members are problem solvers focused on helping sandbox participants achieve success through addressing challenges and answering questions.

Transparency:

Information sharing is designed to improve the overall uptake of successful new approaches. Some of the sandboxes we’ve researched provide information about who is participating, the approaches they are testing or have tested, and their outcomes. 

Streamlined application processes:

Sandbox application processes are intentionally short to maintain a focus on testing, learning and adaptation, rather than evaluating proposed approaches before they’re even tested.  Therefore, program management and decision making can be limited to fewer people or departments—not in order to keep projects out, but—to streamline the process for welcoming projects in. Sandboxes are really about limited testing of ideas, not total policy overhauls.

Open calls and cohorts:

Publicly advertising program objectives and timelines has the potential to engage more participants than just those who are “in the know” about government initiatives. A cohort approach establishes a clear timeline for the testing period and reduces work for agency staff by putting everyone on the same schedule. Some sandboxes choose to operate on a rolling enrollment cycle, rather than admitting cohorts.

Environmental sandboxes vs. classic sandboxes

At the time of writing this, no sandbox exists specifically for environmental restoration, and the only industry-agnostic sandbox has not handled any environmental projects. So if you think something is an environmental sandbox, it probably isn’t. But we can infer what would be different between a sandbox for nature and a sandbox for, say, financial institutions; for the purposes of this section, we’ll refer to non-nature sandboxes as “classic sandboxes”. 

The main difference between an environmental sandbox and a classic sandbox lies in who (or what) has to be protected. In a classic sandbox, there are strong protections for the consumer, and this is something that people who have written about sandboxes emphasize as a key design element. With an environmental sandbox, the experimentation is happening with a good that’s more public, such as a forest or a waterway. There is not necessarily one consumer. Even when the affected ecosystems exist on privately owned land, people who have never explicitly opted in to the sandbox are benefitting from clean air and water downstream and would suffer if a sandbox participant degraded these ecosystem services. So, while the sandbox would grant a regulatory exemption, appropriate protections for nature must still occur. 

How do you design clear protections for nature rather than protections for the consumer? Well, it’s not all that different. In classic sandboxes, the administrator negotiates with any applicant to determine exactly what the safeguards are. They write an agreement to ensure that target goals are being achieved and major negative consequences are prevented. Likewise, for a nature sandbox, the sandbox administrator establishes safeguards in order to protect things like water quality and habitat. For instance, a sandbox participant who wanted to test a wood vault that buries woody biomass to sequester carbon might have to seek exemption from regulations designed for landfills. To guard against fire risk the sandbox administrator might require that the participant monitor the area for methane leaks. That would both recognize that a novel, nature-based solution shouldn’t be subject to the same rules as a land use that could seriously harm the environment and would tailor new requirements to address potential risk.

It’s also worth noting that for environmental sandboxes, the government creating the sandbox might also be the payor (i.e., buyer), but that is certainly not always the case. Restoration projects are often paid for by the private and nonprofit sectors. The funding might also come from a level of government different from the one that handles the regulations. For instance, federal wetland restoration standards might be the subject of the sandbox, while the sandbox participant could be a county government (or their contractor) paying for the project to meet its MS4 requirements. While the question of funding source is a difference between classic and environmental sandboxes, it’s not particularly material. The important issue is who gets to issue the exemption and how that leads to a better outcome.

Environmental sandboxes have tremendous potential to increase the speed at which effective restoration occurs. For that to happen, it’s crucial that as they are put into practice, policymakers keep in mind what a sandbox really is and what it is not. Sandboxes are not blanket waivers but targeted, time-limited exemptions meant to facilitate learning; they’re not one-off, expensive pilots. Sandboxes for nature will have some unique features compared to classic sandboxes, but both kinds are defined by customizing guardrails for a novel situation. Above all, an environmental sandbox creates the conditions for new solutions to thrive while still protecting people and nature.

If you want to talk about how you can make one happen in your backyard, send an email to phiggins@policyinnovation.org and hhuntley@policyinnovation.org .