Relationships between causal factors affecting future carbon dioxide output from Thailand's transportation sector under the government's sustainability policy: Expanding the SEM-VECM model

Abstract

This research aims to analyze the relationships between causal factors likely to affect future CO2 emissions from the Thai transportation sector by developing the Structural Equation Modeling-Vector Autoregressive Error Correction Mechanism Model (SEM-VECM Model). This model was created to fill information gaps of older models. In addition, the model provides the unique feature of viable model application for different sectors in various contexts. The model revealed all exogenous variables that have direct and indirect influences over changes in CO2 emissions. The variables show a direct effect at a confidence interval of 99%, including per capita GDP (Δln(GDP)t-1), labor growth (Δln(L)t-1), urbanization rate factor (Δln(URT)t-1), industrial structure (Δln(IS)t-1), energy consumption (Δln(EC)t-1), foreign direct investment (Δln(FDI)t-1), oil price (Δln(OP)t-1), and net exports (Δln(X - E)t-1). In addition, it was found that every variable in the SEM-VECM model has an indirect effect on changes in CO2 emissions at a confidence interval of 99%. The SEM-VECM model has the ability to adjust to the equilibrium equivalent to 39%. However, it also helps to identify the degree of direct effect that each causal factor has on the others. Specifically, labor growth (Δln(L)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1) and energy consumption (Δln(EC)t-1) at a confidence interval of 99%, while urbanization rate (Δln(URT)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1), labor growth (Δln(L)t-1), and net exports (Δln(X - E)t-1) at a confidence interval of 99%. Furthermore, industrial structure (Δln(IS)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1) at a confidence interval of 99%, whereas energy consumption (Δln(EC)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1) at a confidence interval of 99%. Foreign direct investment (Δln(FDI)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1) at a confidence interval of 99%, while oil price (Δln(OP)t-1) had a direct effect on industrial structure (Δln(IS)t-1), energy consumption (Δln(EC)t-1), and net exports (Δln(X - E)t-1) at a confidence interval of 99%. Lastly, net exports (Δln(X - E)t-1) had a direct effect on per capita GDP (Δln(GDP)t-1) at a confidence interval of 99%. The model eliminates the problem of heteroskedasticity, multicollinearity, and autocorrelation. In addition, it was found that the model is white noise. When the SEM-VECM Model was used for 30-year forecasting (2018-2047), it projected that CO2 emissions would increase steadily by 67.04% (2047/2018) or 123.90 Mt CO2 Eq. by 2047. The performance of the SEM-VECM Model was assessed and produced a mean absolute percentage error (MAPE) of 1.21% and root mean square error (RMSE) of 1.02%. When comparing the performance value with the values of other, older models, the SEM-VECM Model was found to be more effective and useful for future research and policy planning for Thailand's sustainability goals.