diff --git a/core/dbt/cli/option_types.py b/core/dbt/cli/option_types.py
index ef04e348260..544b09bee2a 100644
--- a/core/dbt/cli/option_types.py
+++ b/core/dbt/cli/option_types.py
@@ -51,8 +51,12 @@ class WarnErrorOptionsType(YAML):
     def convert(self, value, param, ctx):
         # this function is being used by param in click
         include_exclude = super().convert(value, param, ctx)
-        exclusive_primary_alt_value_setting(include_exclude, "include", "error")
-        exclusive_primary_alt_value_setting(include_exclude, "exclude", "warn")
+        exclusive_primary_alt_value_setting(
+            include_exclude, "include", "error", "warn_error_options"
+        )
+        exclusive_primary_alt_value_setting(
+            include_exclude, "exclude", "warn", "warn_error_options"
+        )
 
         return WarnErrorOptions(
             include=include_exclude.get("include", []),
diff --git a/core/dbt/config/project.py b/core/dbt/config/project.py
index 7309df3cbd6..52b20e5179d 100644
--- a/core/dbt/config/project.py
+++ b/core/dbt/config/project.py
@@ -27,7 +27,7 @@
 from dbt.adapters.contracts.connection import QueryComment
 from dbt.exceptions import (
     DbtProjectError,
-    DbtWarnErrorOptionsError,
+    DbtExclusivePropertyUseError,
     ProjectContractBrokenError,
     ProjectContractError,
     DbtRuntimeError,
@@ -840,12 +840,16 @@ def read_project_flags(project_dir: str, profiles_dir: str) -> ProjectFlags:
             # handle collapsing `include` and `error` as well as collapsing `exclude` and `warn`
             # for warn_error_options
             warn_error_options = project_flags.get("warn_error_options")
-            exclusive_primary_alt_value_setting(warn_error_options, "include", "error")
-            exclusive_primary_alt_value_setting(warn_error_options, "exclude", "warn")
+            exclusive_primary_alt_value_setting(
+                warn_error_options, "include", "error", "warn_error_options"
+            )
+            exclusive_primary_alt_value_setting(
+                warn_error_options, "exclude", "warn", "warn_error_options"
+            )
 
             ProjectFlags.validate(project_flags)
             return ProjectFlags.from_dict(project_flags)
-    except (DbtProjectError, DbtWarnErrorOptionsError) as exc:
+    except (DbtProjectError, DbtExclusivePropertyUseError) as exc:
         # We don't want to eat the DbtProjectError for UserConfig to ProjectFlags or
         # DbtConfigError for warn_error_options munging
         raise exc
diff --git a/core/dbt/config/utils.py b/core/dbt/config/utils.py
index b3a40af884a..f94e5dce0ad 100644
--- a/core/dbt/config/utils.py
+++ b/core/dbt/config/utils.py
@@ -4,7 +4,7 @@
 from dbt.clients import yaml_helper
 from dbt_common.events.functions import fire_event
 from dbt.events.types import InvalidOptionYAML
-from dbt.exceptions import DbtWarnErrorOptionsError, OptionNotYamlDictError
+from dbt.exceptions import DbtExclusivePropertyUseError, OptionNotYamlDictError
 from dbt_common.exceptions import DbtValidationError
 
 
@@ -26,7 +26,10 @@ def parse_cli_yaml_string(var_string: str, cli_option_name: str) -> Dict[str, An
 
 
 def exclusive_primary_alt_value_setting(
-    dictionary: Optional[Dict[str, Any]], primary: str, alt: str
+    dictionary: Optional[Dict[str, Any]],
+    primary: str,
+    alt: str,
+    parent_config: Optional[str] = None,
 ) -> None:
     """Munges in place under the primary the options for the primary and alt values
 
@@ -42,8 +45,9 @@ def exclusive_primary_alt_value_setting(
     alt_options = dictionary.get(alt)
 
     if primary_options and alt_options:
-        raise DbtWarnErrorOptionsError(
-            f"Only `{alt}` or `{primary}` can be specified in `warn_error_options`, not both"
+        where = f" in `{parent_config}`" if parent_config is not None else ""
+        raise DbtExclusivePropertyUseError(
+            f"Only `{alt}` or `{primary}` can be specified{where}, not both"
         )
 
     if alt_options:
diff --git a/core/dbt/exceptions.py b/core/dbt/exceptions.py
index a692fad5389..ea44f0c055c 100644
--- a/core/dbt/exceptions.py
+++ b/core/dbt/exceptions.py
@@ -113,7 +113,7 @@ class DbtProfileError(DbtConfigError):
     pass
 
 
-class DbtWarnErrorOptionsError(DbtConfigError):
+class DbtExclusivePropertyUseError(DbtConfigError):
     pass
 
 
diff --git a/tests/unit/config/test_utils.py b/tests/unit/config/test_utils.py
index 57ede0dfb00..d2d7f99499d 100644
--- a/tests/unit/config/test_utils.py
+++ b/tests/unit/config/test_utils.py
@@ -1,7 +1,7 @@
 import pytest
 
 from dbt.config.utils import exclusive_primary_alt_value_setting
-from dbt.exceptions import DbtWarnErrorOptionsError
+from dbt.exceptions import DbtExclusivePropertyUseError
 
 
 class TestExclusivePrimaryAltValueSetting:
@@ -31,7 +31,7 @@ def test_alt_set(self, primary_key: str, alt_key: str, value: str):
 
     def test_primary_and_alt_set(self, primary_key: str, alt_key: str, value: str):
         test_dict = {primary_key: value, alt_key: value}
-        with pytest.raises(DbtWarnErrorOptionsError):
+        with pytest.raises(DbtExclusivePropertyUseError):
             exclusive_primary_alt_value_setting(test_dict, primary_key, alt_key)
 
     def test_neither_primary_nor_alt_set(self, primary_key: str, alt_key: str):