Regulating earthquake risk: preferences for trade-offs between economic benefits and regulation of produced wastewater injection from hydraulic fracturing

The marked increase in earthquakes in Oklahoma since 2009 is widely associated with underground wastewater injection by oil and gas companies. Using the mixed logit model, we determine willingness to accept potential job and tax revenue losses in return for fewer earthquakes and reduced risk of damaging earthquakes in Oklahoma. Results suggest people favor a lower risk of a damaging earthquake, reduction in earthquakes, fewer jobs lost, and reduced tax revenue losses from oil and gas companies. Republicans (Democrats) are less (more) willing to forgo jobs and tax revenue as a result of regulated wastewater injection, which highlights evidence of heterogeneous preferences for regulation.