Q:

What's the proper way of setting environment variable in Netlify functions?

What's the proper way of setting environment variables in netlify? I would like to be able to set different values for the variables depending on the environment.
Pseudo code:
let host;
if (process.env.GATSBY_CUSTOM_CONTEXT === 'production') {
    host = process.env.PRODUCTION_HOST
} else if (process.env.GATSBY_CUSTOM_CONTEXT === 'development') {
    host = process.env.DEVELOPMENT_HOST
}

I have tried passing env variable thru CLI, like GATSBY_CUSTOM_CONTEXT=production gatsby build and I also tried using same command with cross-env. 
My other attempt used netlify.toml:
[build]
  base = "/"
  publish = "public"
  command = "yarn build"
  functions = "src/functions"

[context.production]
  [context.production.environment]
    GATSBY_CUSTOM_CONTEXT = "production"

All of these options worked with netlify dev locally, but in production GATSBY_CUSTOM_CONTEXT is always undefined.

A:

The reason you can't resolve the environment variables in your Netlify functions is because as of the time of your question, Netlify does not transfer the environment variables from the netlify.toml file.
You must put them into the admin panel in your site settings in the app.netlify.com dashboard.

