In a Seam project (or maybe for kinds of EJB projects using Hibernate?) the 
database is created during server start (plus import.sql gets imported). This 
is an important difference to e.g. AppFuse (Spring + Hibernate), where the 
database gets created by an ant task which you have to call explicetly (btw. 
this is the better solution in my opinion... but you can argue about that *g*).

The line texan made bold is an important one. There are two values (as far as I 
know), and I experienced the following behaviour:

create-drop: The database is recreated every time your server starts. If there 
is already a database it gets dropped before, so all your data entries vanish.

update: The database is only created once, and your data "survives" server 
restarts. But if you change your entities by adding new fields the new fields 
get created in the database, too (upon server restart, remember ;)). If you 
delete entity bean fields the fields in the database remain. And if you change 
fields (e.g. from type Long to String, or from @ManyToOne to @ManyToMany) you 
will run into trouble, so you better do not do this ;).

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