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(kpathsea.info)Variable expansion

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Variable expansion
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  `$foo' or `${foo}' in a path element is replaced by (1) the value of
an environment variable `foo' (if defined); (2) the value of `foo' from
`texmf.cnf' (if defined); (3) the empty string.

  If the character after the `$' is alphanumeric or `_', the variable
name consists of all consecutive such characters. If the character
after the `$' is a `{', the variable name consists of everything up to
the next `}' (braces may not be nested around variable names).
Otherwise, Kpathsea gives a warning and ignores the `$' and its
following character.

  You must quote the $'s and braces as necessary for your shell.
_Shell_ variable values cannot be seen by Kpathsea, i.e., ones defined
by `set' in C shells and without `export' in Bourne shells.

  For example, given
     setenv tex /home/texmf
     setenv TEXINPUTS .:$tex:${tex}prev
   the final `TEXINPUTS' path is the three directories:
     .:/home/texmf:/home/texmfprev

  The `.PROGNAME' suffix on variables and `_PROGNAME' on environment
variable names are not implemented for general variable expansions.
These are only recognized when search paths are initialized (Note: Path
sources).

  Variable expansion is implemented in the source file
`kpathsea/variable.c'.