Suppose that an earthen dam breaks, flooding down-stream communities, damaging o

Question

Suppose that an earthen dam breaks, flooding down-stream communities, damaging or destroying hundreds of millions of dollars worth of homes and businesses in addition to any recreational and environmental impact. See http://en.wikipedia.org/wiki/Teton_Dam for an actual example of such an occurrence. (Note that this problem is about theapproach to and methodology of accounting for GDP, not about specific numbers.)

a) Visit the accompanying Wikipedia entry and determine approximately what measurable impact on GDP the Teton Dam disaster generated. Do you think that

Explanation / Answer

1. Impact of Teton Dam disaster on GDP

The dam cost about $100 million to build, and the federal government paid over $300 million in claims related to its failure. Total damage estimates have ranged up to $2 billion.

After the dam's collapse, debris clean-up began immediately and took the remainder of the summer. Rebuilding of damaged property continued for several years. Within a week after the disaster, President Gerald Ford requested a $200 million appropriation for initial payments for damages, without assigning responsibility for Teton Dam

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