Why do environmentVariables from launchSettings.json profiles not load when aspNetCore web.config sections exist?

We recently upgraded a .NET Core 2.1 Web App to .NET 3.1. Ever since, our profiles in launchSettings.json are not properly working. Specifically, the environmentVariables are not loading, with one in particular being “ASPNETCORE_ENVIRONMENT”. We use this to switch appSettings.{Environment}.json when debugging locally to target different environments.

Do .NET Core apps require the .NET runtime installed on the target machine?

In this video, Scott Hanselman interviews a guy from the ASP.NET team. He says that one of the goals of ASP.NET 5, on top of .NET Core, is that the apps won’t depend on the .NET Framework and GAC assemblies on the hosting server. Instead, .NET Core libraries will be released via NuGet packages and apps will be deployed with their dependencies.