Paying businesses and individuals to recycle is the best way to avoid wasting scarce metals, water and phosphorus, environmental think tank Green Alliance said today.

New research by the group found that metals used in mobile phones, televisions and computers, which are also used in many green technologies, are simply being thrown away, despite EU and UK recycling targets.

Water and phosphorus, crucial for agriculture, are used equally wastefully, the report published today says.

The report also argues that resource inefficiency means the UK's dependence on imports is increasing daily, with only one-fifth of materials entering the UK economy from recycled sources.

Moreover, the increase in energy and water needed to extract metals from dwindling ores means extracting one tonne of copper generates an average of 300 tonnes of waste.

These findings are particularly concerning given the UN's prediction that annual resource extraction will triple by 2050 under a business-as-usual scenario, leading to soaring raw material costs.

The report calls for the creation of a more "circular economy", arguing for better product design and economic incentives tailored to promote reuse and recycling.

Encouraging substitution of materials at the design phase is one option put forward by the report, although it also recommends introducing refundable deposits to increase reclamation levels beyond the three per cent of people who currently return their mobile phone for recycling or reuse.

Incentives to reduce demand of phosphorus or promote secondary sources for fertiliser such as sewage sludge, could also prove effective, while increasing metering to the near-universal levels seen on the continent would cut water use, the report states.

Matthew Spencer, director of Green Alliance, echoed Defra's view that businesses could save £23bn a year through more efficient use of energy and materials.

"In an age of increasing resource competition, it no longer makes economic sense to allow valuable resources to be treated as waste," Spencer said in a statement.

"Incentivising 'circularity' in supply chains will help protect the UK economy from resource shocks and reduce the growing environmental impact of resources extraction. The best political and business leaders will seek to mimic the inherent circularity of natural systems in their stewardship of resources."