test + less verbose error dump

core/dbt/cli/option_types.py

@@ -1,7 +1,7 @@
 from click import ParamType, Choice
 
 from dbt.config.utils import parse_cli_yaml_string
-from dbt.exceptions import ValidationError
+from dbt.exceptions import ValidationError, DbtValidationError, OptionNotYamlDictError
 
 from dbt.helper_types import WarnErrorOptions
 
@@ -18,7 +18,7 @@ def convert(self, value, param, ctx):
         try:
             param_option_name = param.opts[0] if param.opts else param.name
             return parse_cli_yaml_string(value, param_option_name.strip("-"))
-        except ValidationError:
+        except (ValidationError, DbtValidationError, OptionNotYamlDictError):
             self.fail(f"String '{value}' is not valid YAML", param, ctx)
 
 

core/dbt/config/utils.py

@@ -19,6 +19,6 @@ def parse_cli_yaml_string(var_string: str, cli_option_name: str) -> Dict[str, An
             return cli_vars
         else:
             raise OptionNotYamlDictError(var_type, cli_option_name)
-    except DbtValidationError:
+    except (DbtValidationError, OptionNotYamlDictError):
         fire_event(InvalidOptionYAML(option_name=cli_option_name))
         raise

tests/unit/test_option_types.py

@@ -0,0 +1,26 @@
+from click import Option, BadParameter
+import pytest
+
+from dbt.cli.option_types import YAML
+
+
+class TestYAML:
+    @pytest.mark.parametrize(
+        "raw_value,expected_converted_value",
+        [
+            ("{}", {}),
+            ("{'test_var_key': 'test_var_value'}", {"test_var_key": "test_var_value"}),
+        ],
+    )
+    def test_yaml_init(self, raw_value, expected_converted_value):
+        converted_value = YAML().convert(raw_value, Option(["--vars"]), None)
+        assert converted_value == expected_converted_value
+
+    @pytest.mark.parametrize(
+        "invalid_yaml_str",
+        ["{", ""],
+    )
+    def test_yaml_init_invalid_yaml_str(self, invalid_yaml_str):
+        with pytest.raises(BadParameter) as e:
+            YAML().convert(invalid_yaml_str, Option(["--vars"]), None)
+        assert "--vars" in e.value.format_message()