**Introduction:**
In civil engineering, the construction of dams is a significant undertaking that requires careful planning and consideration of various factors. One important aspect to consider is the cost per unit of storage, which refers to the cost associated with storing a specific volume of water in the dam. It is essential to understand how this cost varies with the height of the dam.

**Explanation:**
The cost per unit of storage is influenced by several factors, including the materials and labor required for construction, the design and engineering considerations, and the amount of land required to create the reservoir. As the height of the dam is increased, the following factors come into play:

**1. Increased construction materials and labor:**
Constructing a taller dam requires more materials such as concrete, steel, and other construction materials. Additionally, increased labor is needed to build the dam to the greater height. These factors contribute to higher costs per unit of storage.

**2. Increased design and engineering complexity:**
As the height of the dam increases, the design and engineering complexity also increase. The structural stability of the dam becomes more critical, and additional measures such as counterforts or buttresses may be required to ensure its stability. These additional design considerations add to the overall cost of the dam.

**3. Increased land acquisition and environmental impact:**
A taller dam requires a larger reservoir, which means more land needs to be acquired to create the reservoir. This land acquisition process can be costly, especially if it involves displacing communities or acquiring valuable property. Additionally, the environmental impact of creating a larger reservoir may require additional mitigation measures, which can also increase costs.

**4. Economy of scale:**
However, as the height of the dam increases, there is also an economy of scale factor that comes into play. Building a taller dam allows for more storage capacity in a smaller footprint. This can lead to a decrease in the cost per unit of storage as the overall cost is spread over a larger volume.

**Conclusion:**
Overall, as the height of a proposed dam is increased, the cost per unit of storage initially decreases due to the economy of scale. However, as the height continues to increase, the additional costs associated with construction materials, labor, design complexity, land acquisition, and environmental impact outweigh the benefits of the economy of scale. Therefore, the cost per unit of storage eventually starts to increase. Hence, the correct answer is option 'D' - initially decreases and then increases.