water hammer

[1] It can, but not necessarily, and [2] it's a big subject and you have provided no information.

What is your application? Are you asking about building plumbing, municipal distribution, long distance water transmission mains, etc?

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"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

Yes, water hammer can burst pipes.

http://www.youtube.com/watch?v=5WTVQtvavmY
http://en.wikipedia.org/wiki/Water_hammer

The following design elements listed on wikipedia may reduce or eliminate water hammer:

1. Reduce the pressure of the water supply to the building by fitting a regulator.
2. Lower fluid velocities. To keep water hammer low, pipe-sizing charts for some applications recommend flow velocity at or below 1.5 m/s (4.9 ft/s)
3. Fit slowly closing valves. Toilet fill valves are available in a quiet fill type that closes quietly.
4. High pipeline pressure rating (expensive).
5. Good pipeline control (start-up and shut-down procedures).
6. Water towers (used in many drinking water systems) help maintain steady flow rates and trap large pressure fluctuations.
7. Air vessels work in much the same way as water towers, but are pressurized. They typically have an air cushion above the fluid level in the vessel, which may be regulated or separated by a bladder. Sizes of air vessels may be up to hundreds of cubic meters on large pipelines. They come in many shapes, sizes and configurations. Such vessels often are called accumulators or expansion tanks.
8. A hydropneumatic device similar in principle to a shock absorber called a 'Water Hammer Arrestor' can be installed between the water pipe and the machine, to absorb the shock and stop the banging.
9. Air valves often remediate low pressures at high points in the pipeline. Though effective, sometimes large numbers of air valves need be installed. These valves also allow air into the system, which is often unwanted.
10. Shorter branch pipe lengths.
11. Shorter lengths of straight pipe, i.e. add elbows, expansion loops. Water hammer is related to the speed of sound in the fluid, and elbows reduce the influences of pressure waves.
12. Arranging the larger piping in loops that supply shorter smaller run-out pipe branches. With looped piping, lower velocity flows from both sides of a loop can serve a branch.
13. Flywheel on pump.
14. Pumping station bypass.

@fem3 I wish to develop a water hammer investigating too that would be used by municipalities. The tool is supposed to flag when there is a danger of a pipe burst.

First: This is not my field. I clicked out of curiosity.

Second: If you are asking these questions, should you be developing a tool?

Honestly only trying to help/asking out of surprise...

If you installed a pressure gauge with digital readout, you can use the instrument package to monitor and record the pressures in the pipe.

I have seen such devices document events such as when the fire department has closed valves too quickly and inadvertently caused water hammer.

Most of the other "tools" are design elements.

Valve timing. Use a self closing valve and slow down the time in takes to completely shut the valve. Only "slam" it closed in an emergency. You can hydraulic, mechanical, or air accuated automatic valves readily.

PRV, Pressure release valve.... know the pipe capacity and set the valve