diff --git a/lib/yacht/loader.rb b/lib/yacht/loader.rb
index 18ecccc..13b4b21 100644
--- a/lib/yacht/loader.rb
+++ b/lib/yacht/loader.rb
@@ -85,19 +85,21 @@ def load_config_file(file_type, opts={})
     end
 
     def chain_configs(config, env)
-      raise Yacht::LoadError.new "environment '#{env}' does not exist" unless config.has_key?(env)
-
-      parent = if config[env]['_parent']
-                 chain_configs(config, config[env]['_parent'])
-               else
-                 config['default'] || {}
-               end
-
-      parent.deep_merge(config[env])
+      if config.has_key?(env)
+        parent = if parent_env = config[env]['_parent']
+                   raise Yacht::LoadError.new "environment '#{parent_env}' does not exist" unless config.has_key?(parent_env)
+                   chain_configs(config, config[env]['_parent'])
+                 else
+                   config['default'] || {}
+                 end
+
+        parent.deep_merge(config[env])
+      else
+        config['default'] || {}
+      end
     end
   end
-
 end
 
 # Alias for Yacht::Loader for backwards compatibility
-Object.const_set(:YachtLoader, Yacht::Loader)
\ No newline at end of file
+Object.const_set(:YachtLoader, Yacht::Loader)
diff --git a/spec/yacht/loader_spec.rb b/spec/yacht/loader_spec.rb
index b9f4992..91a538b 100644
--- a/spec/yacht/loader_spec.rb
+++ b/spec/yacht/loader_spec.rb
@@ -38,13 +38,6 @@
       subject.to_hash(:env => 'wacky').should  == mock_base_config['wacky']
     end
 
-    it "raises an error if an environment is requested that doesn't exist" do
-      expect {
-        subject.environment = 'nonexistent'
-        subject.to_hash
-      }.to raise_error( Yacht::LoadError, /does not exist/)
-    end
-
     context "with inheritance" do
       let(:mock_base_config_with_inheritance) do
         {
@@ -87,6 +80,36 @@
         }
       end
     end
+
+    context "with inheritance when a parent is missing" do
+      let(:mock_base_config_with_inheritance) do
+        {
+          'default' => {
+            :doggies   => {
+              'lassie'  => 'nice',
+              'cujo'    => 'mean'
+            }
+          },
+          'kid'     => {
+            '_parent' => 'deadbeat_dad',
+            :doggies   => {
+              'cerberus'   => '3-headed'
+            }
+          }
+        }
+      end
+
+      before do
+        subject.stub(:base_config).and_return(mock_base_config_with_inheritance)
+        subject.environment = 'kid'
+      end
+
+      it "raises an error if an environment is requested whose parent doesn't exist" do
+        expect {
+          subject.to_hash
+        }.to raise_error( Yacht::LoadError, /does not exist/)
+      end
+    end
   end
 
   describe :all do
@@ -104,6 +127,21 @@
       subject.environment = 'wacky'
       subject.to_hash[:color_of_the_day].should == 'purple'
     end
+
+    it "returns the defaults for environments that do not exist" do
+      subject.stub(:base_config).and_return({
+        'default' => {
+          :color_of_the_day => 'orange',
+        },
+        'wacky' => {
+          :color_of_the_day => 'purple',
+        }
+      })
+      subject.stub(:local_config).and_return({})
+
+      subject.environment = 'nerdy'
+      subject.to_hash.should == {:color_of_the_day => 'orange'}
+    end
   end
 
   describe :base_config do
@@ -246,4 +284,4 @@
   it "should alias YachtLoader to Yacht::Loader for backwards compatibility" do
     ::YachtLoader.should == Yacht::Loader
   end
-end
\ No newline at end of file
+end