While they remove carbon dioxide from the air, conserve soil and water, and house thousands of species, forests also supply potentially valuable pharmaceuticals, and, as sources of building material and firewood, that provide employment for millions worldwide.
(A) pharmaceuticals, and, as sources of building material and firewood, that provide "that" incorrect modifies "building material and firewood" - it is the forests that provide employment. Eliminate.
(B) pharmaceuticals, and sources of building material and firewood, are providers of Placement of "and" implies that forests provide "sources of building material and firewood". Original meaning is that the forests are the sources themselves. Eliminate.
(C) pharmaceuticals and, as sources of building material and firewood that are providing Same error as in (A). Eliminate.
(D) pharmaceuticals and as sources of building material and firewood, for providing Let's focus on the last part of the sentence: "...forests also supply potentially valuable pharmaceuticals and as sources of building material and firewood, for providing employment for millions worldwide". Clearly an incomplete sentence fragment, not to mention the same meaning error in "source" as in (A) and (C). Eliminate.
(E) pharmaceuticals and, as sources of building material and firewood, provide Correct answer - above errors are eliminated and no new errors are introduced.