Determinants of earthquake damage liability assignment in Oklahoma: A Bayesian Tobit censored approach

Scientific evidence suggests earthquakes occurring in Oklahoma since 2009 are not “acts of God”, but very likely triggered by wastewater injection in disposal wells by oil and gas (O&G) companies. While sustaining the O&G industry's contribution to the economy is generally important, achieving environmental and public protection may in part rely on how earthquake inducers are held liable for damage. We use a Bayesian Tobit censored model, estimated using Markov Chain Monte Carlo (MCMC) methods to determine factors that influence public preferences for how much liability O&G companies should assume for induced earthquake-related damage. Data are from a survey of Oklahomans collected in 2017 by Survey Sampling International (SSI). Results suggest people would, on average, hold O&G companies liable for 75% of the earthquake damage. We find socio-demographic, earthquake, locational, and O&G industry-related factors as the main drivers of earthquake damage liability. However, their effects on damage liability vary between respondents that have had their property damaged by earthquakes and those that in some way benefit from O&G companies through jobs and gas-leases. We provide insights by which individuals might lobby representatives to impose new liability or regulatory mechanisms on O&G companies to avoid or compensate for earthquake damage.