Currently a bogus $GHC_ENVIRONMENT can make cabal fail. Cabal itself could trigger this issue if it's called inside a cabal exec (though this is probably a terrible idea in the first place). Local and default environments instead do not cause any interference.

Should we always pass -package-env=- to ghc, or set $GHC_ENVIRONMENT to -?

I think yes:

• Cabal manages the set of packages it passes to ghc on its own, so why should it be affected by external environments?
• I don't see any use for passing an environment to cabal
• it can cause inscrutable errors

on the other hand:

• resetting a variable that may heve been explicitly set by the user does not sound good