In which situation can environmental welfare rise without a fall in GDP?

Correct answer: Cleaner technology is adopted in production

Environmental welfare can improve when production becomes less polluting without necessarily reducing the quantity or value of output. Cleaner technology may lower emissions, waste, and resource damage while firms continue producing the same or even greater output. Thus GDP need not fall when environmental quality improves. Option D expresses this possibility. Increasing coal use, deforestation, or open dumping generally damages environmental welfare and therefore cannot provide the stated improvement.