How to pass environment variables to a sql file from bash shell (PostgreSQL)

I need to be able to pass environment variables, from a bash shell executing a .sql file using psql.

The psql command I am running is:

su postgres -c "psql -v ON_ERROR_STOP=1 -v dbname=example -v dbuser=example -e" < ./create-db.sql

Where I have put example is usually set to $DATABASE_NAME and DATABASE_USER respectively which is set in the bash script before executing the psql command.

The create-db.sql file is:

\connect postgres
DROP DATABASE IF EXISTS :dbname;
DO $BEGIN
    CREATE USER :dbuser;
EXCEPTION WHEN duplicate_object THEN
    RAISE NOTICE 'user already exists';
END$;
ALTER ROLE :"dbuser" SET search_path TO :"dbname",public;
CREATE DATABASE :"dbname"
    OWNER=:dbuser
    ENCODING=UTF8
    LC_COLLATE='en_US.UTF-8'
    LC_CTYPE='en_US.UTF-8'
    TEMPLATE=template0;
\connect :"dbname"
CREATE SCHEMA zulip AUTHORIZATION :"dbuser";

The variable substitution in the line DROP DATABASE IF EXISTS :dbname; works, but everything after fails at the CREATE USER :dbuser; line fails and I have tried it as each of the following ways:

CREATE USER :dbuser;
CREATE USER :'dbuser';
CREATE USER :"dbuser";

And it always errors with:

You are now connected to database "postgres" as user "postgres".
DROP DATABASE IF EXISTS example;
NOTICE:  database "example" does not exist, skipping
DROP DATABASE
DO $BEGIN
    CREATE USER :dbuser;
EXCEPTION WHEN duplicate_object THEN
    RAISE NOTICE 'user already exists';
END$;
ERROR:  syntax error at or near ":"
LINE 2:     CREATE USER :dbuser;
                        ^

I'm really not sure where I'm going wrong with the above. Output of psql -V is psql (PostgreSQL) 12.6 (Ubuntu 12.6-0ubuntu0.20.04.1)

This will allow you to do it. In your case, everything between '$$' is a "dollar-quoted string constant, so nothing gets interpreted. See sql syntax, 4.1.2.4.

\set CREDO 'begin create user ' :dbuser '; exception when duplicate_object then raise notice ''user already exists''; end';
do :'CREDO';

StackExchange Database Administrators Q#288859, answer score: 2