Whereas, when first observed, more than a million trees were planted in Nebraska on Arbor Day, it is now observed throughout the nation and the world.
On a different thought, one reason why planting or plantation does not matter is that it is, after all, a modifier phrase and can be dispensed with without any loss of meaning. The focus is on the first Arbor Day in Nebraska and then in the entire world. We can look at the whole issue on a grammar note and we can see why C is the one, plantation or planting notwithstanding.
A) Whereas, when first observed, more than a million trees were planted in Nebraska on Arbor Day, it is now observed throughout the nation and the world. -- After the comma after observed, Arbor Day should have followed.
B) Whereas Arbor Day was first observed with the planting of more than a million trees in Nebraska, now the entire nation and the world observe Arbor Day. --- 1. The combination of passive voice in the subclause and the active voice in the main clause ' is jarring. 2. Look at the placement of the adverb 'now', which should normally modify the verb 'observe'. On the contrary, it is modifying the entire nation.
C) Whereas Arbor Day was first observed in Nebraska with the plantation of more than a million trees, it is now observed throughout the nation and the world. ---Passive and passive combination maintains parallelism and the adverb 'now' correctly modifies observed. The best.
d) Whereas Arbor Day was first observed with the planting of more than a million trees in Nebraska, now the entire nation and the world observes Arbor Day. --- 1 S-V mismatches, 2. Misplaced adverb 'now' and 3. Passive voice - active voice unparallel combo.
e) Whereas Arbor Day was first observed along with the plantation of more than a million trees in Nebraska, now the entire nation and the world observe Arbor Day. --At least two errors that we have seen in D.