dotnet run OR dotnet watch with development environment from command line?

You don't have to use environment variables if you adjust how the WebHostBuilder processes its configuration. This is merely the default for dotnet new -t web. For example, if you wanted to be able to set the default environment to "development" instead of production and facilitate overriding the environment in the command line, you could do that by modifying the normal Program.cs code from this ...

    public static void Main(string[] args) {
        var host = new WebHostBuilder()
            .UseKestrel()
            .UseUrls("http://0.0.0.0:5000")
            .UseContentRoot(Directory.GetCurrentDirectory())
            .UseIISIntegration()
            .UseStartup<Startup>()
            .Build();

        host.Run();
    }

... into something like this ...

    private static readonly Dictionary<string, string> defaults =
        new Dictionary<string, string> {
            { WebHostDefaults.EnvironmentKey, "development" }
        };

    public static void Main(string[] args) {
        var configuration =
            new ConfigurationBuilder()
                .AddInMemoryCollection(defaults)
                .AddEnvironmentVariables("ASPNETCORE_")
                .AddCommandLine(args)
                .Build();

        var host =
            new WebHostBuilder()
                .UseConfiguration(configuration)
                .UseKestrel()
                .UseUrls("http://0.0.0.0:5000")
                .UseContentRoot(Directory.GetCurrentDirectory())
                .UseIISIntegration()
                .UseStartup<Startup>()
                .Build();

        host.Run();
    }

Doing this, the environment variables would still work, but you can override it on the command line without any third-party dependencies, like so:

dotnet run environment=development
dotnet run environment=staging

This is actually what the yeoman generators do.

ASPNETCORE_ENVIRONMENT is an environment variable (and AFAIK) not a switch to the dotnet cli.

So what you would do is set it prior to using the tool:

rem Windows
C:\> set ASPNETCORE_ENVIRONMENT=Development
C:\> dotnet ...

rem Unix
$ export ASPNETCORE_ENVIRONMENT=Development
$ dotnet ...

You can also set the variable inline when calling dotnet:

ASPNETCORE_ENVIRONMENT=Development dotnet run

I have found this is great for NPM scripts, but must always be called right before dotnet, e.g.:

{
  ...
  "scripts": {
    "start": "cd MyApp && ASPNETCORE_ENVIRONMENT=Development dotnet run",
    "watch": "cd MyApp && ASPNETCORE_ENVIRONMENT=Development dotnet watch"
  },
}

Note: This only works in OS X or Linux; for a cross-platform solution, you can use cross-env:

npm install cross-env -D

Then change the scripts to:

{
  ...
  "scripts": {
    "start": "cd MyApp && cross-env ASPNETCORE_ENVIRONMENT=Development dotnet run",
    "watch": "cd MyApp && cross-env ASPNETCORE_ENVIRONMENT=Development dotnet watch"
  },
}