Docker multiple environments

You could take some clues from "Using Compose in production"

You’ll almost certainly want to make changes to your app configuration that are more appropriate to a live environment. These changes may include:

• Removing any volume bindings for application code, so that code stays inside the container and can’t be changed from outside
• Binding to different ports on the host
• Setting environment variables differently (e.g., to decrease the verbosity of logging, or to enable email sending)
• Specifying a restart policy (e.g., restart: always) to avoid downtime
• Adding extra services (e.g., a log aggregator)

The advice is then not quite similar to the example you mention:

For this reason, you’ll probably want to define an additional Compose file, say production.yml, which specifies production-appropriate configuration. This configuration file only needs to include the changes you’d like to make from the original Compose file.

docker-compose -f docker-compose.yml -f production.yml up -d

This overriding mechanism is better than trying to mix dev and prod logic in one compose file, with environment variable to try and select one.

Note: If you name your second dockerfile docker-compose.override.yml, a simple docker-compose up would read the overrides automatically.
But in your case, a name based on the environment is clearer.

Docker Compose will read docker-compose.yml and docker-compose.override.yml by default. Understanding-Multiple-Compose-Files

You can set a default docker-compose.yml and different overwrite compose file. For example, docker-compose.prod.yml docker-compose.test.yml. Keep them in the same place.

Then create a symbolic link named docker-compose.override.yml for each env.
Track docker-compose.{env}.yml files and add docker-compose.override.yml to .gitignore.
In prod env: ln -s ./docker-compose.prod.yml ./docker-compose.override.yml
In test env: ln -s ./docker-compose.test.yml ./docker-compose.override.yml
The project structure will then look like this:

project\  - docker-compose.yml       # tracked  - docker-compose.prod.yml  # tracked  - docker-compose.test.yml  # tracked  - docker-compose.override.yml # ignored & linked to override composefile for current env   - src/  - ...

Then you have done. In each environment, you can use the compose-file with the same command docker-compose up

If you are not sure, use docker-compose config to check if it's been override properly.