The Tellico Dam on the Little Tennessee River was approved and funded by Congress in 1966. TVA did a benefit cost analysis of the Tellico Dam in 1968 and declared the dam was economically worthwhile. The land which would be submerged had already been purchased and construction was scheduled. But in 1973 Congress passed the Endangered Species Act and it was determined that the Tellico Dam would be a danger to a tiny fish called the "snail darter." Construction was stopped while the issue of the snail darter was resolved. The dam was completed in the late 1970's.

There were two cost benefit studies carried out for the Tellico Dam, the first by TVA in 1968 and a second for the Endangered Species Committee. Their results are shown below:

There were some major conceptual errors in the TVA1968 estimates. These include:

• Inclusion of the income from the employment created by the dam. The benefit of job creation would only be valid in the case of chronic unemployment. In effect, the inclusion of such benefits says there is no opportunity cost for the labor used in the project.
• The lack of a cost for the land which would be submerged by the project on the basis of the fact that the land had already been purchased.
• TVA used a nominal interest rate of 10 percent whereas it should have used the real interest rate in computing the annualized costs.
• The inclusion of enhanced land values represents a duplication or double counting of the benefits from flood control, recreation and so forth.
• The recreation value of the project was overestimated because the availability of alternate recreational opportunities in the area was not taken into account.

TVA's estimate of the value of the power generated was low. This was not a conceptual error. TVA did not and could not have anticipated the increase in the price of energy in the 1970's. TVA also did not anticipate the decline in barge traffic and hence overestimated the value of navigation resulting from the project.

The conclusion of the Endanged Species Committee is that the net benefit of the project was negative and therefore it was not worthwhile. This is in contrast to TVA's conclusion that it was worthwhile. Nevertheless the Tellico Dam was completed.