Answer = D.
The reason permanent disposal volume has increased is because of
reduced pickup services. Therefore, that's the problem that needs to be tackled.
(A) Provide larger recycling containers to the residents of the city.
Size of recycling containers is not the issue at hand. The issue is that people are discarding items if pickup for recycling isnt available. This doesn't address the problem.
WRONG.(B) Establish a community program to increase awareness of the benefits of recycling
Doesn't help. What good would bringing awareness do ? People who wont recycle due to lack of pickup wont. This is too mild a reason. What if even after awareness programs people are like Naaah, I aint going to drop the recycle. You come at my house to collect or I'm gonna discard.
WRONG.(C) Establish additional recycling centers as near as possible to the city’s residential areas
This is tricky. Between C and D. But notice,
AS NEAR AS POSSIBLE. But, how do we define that ? It could be 200 miles for that matter. This doesn't necessarily mean that it would be "walking near". They might still need pickup?
Not bullet proof.
WRONG.(D) Provide incentives to the city’s residents to reuse, rather than discard for pickup by the city’s service vehicles, whatever they can
This is the
CORRECT choice. We are giving a reason to these residents to go out of their way and recycle by giving them money. Now they have a reason to go the extra mile and do as the authorities want.
(E) Ease restrictions on the types of materials the city’s service vehicles will pick up for transport to its recycling center.
Again, restrictions were never the problem. Problem was people want PICKUP at their door step.
WRONG.Hope it helps someone. Need good wishes for my GMAT attempt in August

Regards,
Saakhi