Setting this variable to 1 (on, true, yes) causes the runtime to expand environment variables in filename specifications. This is the last step of file name interpretation process. A file specification that includes a "$" character will have all the characters from "$" to the end of the name or to the next "/" or "\" replaced with the value of the matching environment variable. For example, if the program attempts to open $mydir/myfile, the environment and configuration file are searched for the variable mydir. If found, its value is substituted. If not found, the replacement is null. Referring to the preceding example, if mydir is not defined, the runtime attempts to open /myfile. See File Name Interpretation for more information.
The default value is 0 (off, false, no).
If you also use FILE_ALIAS_PREFIX configuration variables: FILE_ALIAS_PREFIX, note that when EXPAND_ENV_VARS is set to 1, FILE_ALIAS_PREFIX treats $FILE1 and FILE1 the same.