i have no idea how environment is calculated right now, but maybe it should just be a nearly direct function of how much infra/pop a nation has. That way a young nation starting out is relatively exempt from having to worry about it and can get their feet under them. As they begin to grow however they'll need to master the game more and more to be successful and continue to grow. This also allows elite players to distance themselves from the pack which isnt a bad thing.
Infrastructure is a big part of what causes environmental damage in RL anyway.
Adding land to the equation would be nice but it would require some pretty complex equations or it would cause land raiding to skyrocket.
EDIT: The more i think about this the more it matches up to RL. When a nation first starts out and the penalty of environment is negligible "dirty" resources like oil and coal can fuel quick growth, but as a nation matures and the price of that growth begins to catch up to them, they have to switch to other trade sets and/or purchase improvements or wonders that benefit the environment to keep it in or restore it to good health.