diff --git a/backend/setup-dev-env.sh b/backend/setup-dev-env.sh
index d7257648..0eaa03a0 100755
--- a/backend/setup-dev-env.sh
+++ b/backend/setup-dev-env.sh
@@ -5,33 +5,10 @@
 # backend can only be built and run if the database is also running, due to
 # sqlx.
 
-# Create .env file.
-env_file=.env
-if [ -f "$env_file" ]; then
-	while true; do
-		printf "You already have a $env_file file, are you sure you want to continue, as this will override your $env_file file? [yn] "
-		read -r answer
-		case "$answer" in
-			y)
-				# Continue with execution.
-				break
-				;;
-			n)
-				echo "Aborting"
-				exit 0
-				;;
-			*)
-				# Try again.
-				echo "Invalid answer. Please type either 'y' for yes, or 'n' for no."
-				continue
-				;;
-		esac
-	done
-fi
-
-echo "Overwriting $env_file file"
-
-cat << 'EOF' > "$env_file"
+# Write .env file to temporary file.
+tmp_env_file="$(mktemp)"
+trap 'rm -rf "$tmp_env_file"' EXIT INT TERM
+cat << 'EOF' > "$tmp_env_file"
 DATABASE_URL="postgres://user:password@localhost:5432/chaos"
 JWT_SECRET="test_secret"
 GOOGLE_CLIENT_ID="test"
@@ -44,6 +21,35 @@ S3_ENDPOINT="https://chaos-storage.s3.ap-southeast-1.amazonaws.com"
 S3_REGION_NAME="ap-southeast-1"
 EOF
 
+# Check the user has all required tools installed.
+for cmd in "which cargo" "which docker && docker info" "which docker-compose || docker compose"; do
+	if ! eval "$cmd" 1>/dev/null 2>&1; then
+		echo "The command '$cmd' failed, indicating you might not have that tool installed." >&2
+		exit 1
+	fi
+done
+
+# Create .env file.
+env_file=.env
+
+# The .env file already exists.
+if [ -f "$env_file" ]; then
+	# If existing env file differs from new one, save the existing env file to a backup file.
+	if ! diff "$env_file" "$tmp_env_file" > /dev/null; then
+		backup_env_file="$env_file"
+		while [ -f "$backup_env_file" ]; do
+			# Append `.backup` to backup filename until we find a filename that doesn't exist yet.
+			backup_env_file="$backup_env_file.backup"
+		done
+
+		echo "Saving existing env file '$env_file' to backup env file '$backup_env_file'"
+		mv "$env_file" "$backup_env_file"
+	fi
+fi
+
+echo "Overwriting $env_file file"
+cp "$tmp_env_file" "$env_file"
+
 # Install sqlx if it isn't installed yet.
 if ! which sqlx >/dev/null; then
 	echo "Installing sqlx"
@@ -58,10 +64,10 @@ docker_compose_file_name="setup-test-database.yml"
 docker_compose_file_path="$this_script_dir/$docker_compose_file_name"
 
 echo 'Starting up postgres database in docker'
-docker-compose -f "$docker_compose_file_path" up --detach
+docker-compose -f "$docker_compose_file_path" up --detach || exit 1
 
 # Ensure the docker container gets killed once this script exits.
-trap 'echo "shutting down $docker_compose_file_path" && docker-compose -f "$docker_compose_file_path" down' EXIT
+trap 'echo "shutting down $docker_compose_file_path" && docker-compose -f "$docker_compose_file_path" down' EXIT INT TERM
 
 # Wait for the database to be ready.
 echo "Waiting for database to be ready"
@@ -69,7 +75,7 @@ sleep 3
 
 # Setup sqlx.
 echo "Setting up sqlx"
-sqlx database create
-sqlx migrate run
+sqlx database create || exit 1
+sqlx migrate run || exit 1
 
 "$SHELL"