The Relationship of Causal Factors Affecting the Future Equilibrium Change of Total Final Energy Consumption in Thailand’s Construction Sector under a Sustainable Development Goal: Enriching the SE-VARX Model

Abstract

This study aims to analyze the influence of the relationship between causal factors that affect the future equilibrium of the total final energy consumption in the construction sector of Thailand under the sustainable development policy for the period of 10 years (2019–2028). This analysis was achieved with the application of the Structure Equilibrium-Vector Autoregressive with Exogenous Variables model (SE-VARX model). This model was developed to fill research gaps and differs from those of previous studies. In the selection of variables, the study focused on Sustainable Development (SD)-based variables available through the lens of Thailand. The exogenous variables included real GDP, population growth, urbanization rate, industrial structure, oil price, foreign direct investment, international tourist arrivals, and total exports and imports. Every variable had a co-integration at level (1) and was used to structure the SE-VARX model. This particular model can effectively analyze the influence of the direct relationship and meet the criteria of goodness of fit without spuriousness. This SE-VARX model allowed us to discover that every variable in the model had an influence on the equilibrium change, where the real GDP is the fastest variable to adjust to the equilibrium while the total final energy consumption has the slowest adjustment ability. The SE-VARX model can be used to project the total final energy consumption, as verified by the performance test result. The test was measured based on the Mean Absolute Percentage Error (MAPE) and Root Mean Square Error (RMSE), and their results were 1.09% and 1.01%, respectively. This performance result had the highest value compared to other models in the past. Thus, the SE-VARX model is suitable for forecasting over the next 10 years (2019–2038). The results of this study reveal that the total final energy consumption in the construction sector of Thailand will exhibit a continuously increasing growth rate from 2019 to 2028, amounting to about 144.29% or equivalent to 364.01 ktoe. In addition, the study also found that future government plans may be difficult to achieve as planned. Therefore, the introduced model should be integrated into national development planning and strategies to achieve sustainable development in the future and to enable its application to other sectors.

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