Fly-tipping, illegal tips and tax evasion are costing the UK more than half a billion pounds a year, according to a report on waste crime.

Crimes such as dumped building rubble and deliberate misclassification of waste to evade tax are "widespread and endemic", according to the report commissioned by the Environmental Services Association Education Trust (ESAET) and conducted by Eunomia.

But despite the scale of the problem, the Environment Agency, that tackles waste crime, is set to lose 1,700 staff by the end of the year and has admitted it expects to "reduce our work on illegal waste activities". The Sentencing Council last week recommended increasing fines for waste dumping, from well below £1m to up to £3m.

Barry Dennis, a trustee of the ESAET charity, said: "We need to stop thinking about 'waste crime' as somehow being less important than other crimes. Fly-tipping, rogue waste operations and tax evasion via the misclassification of waste are crimes that create health risks for the public, are costing the taxpayer millions of pounds a year and are funding organised crime."

Dennis notes in the report that "it seems inconceivable that such serious financial pressure [on the EA] will not mean a squeeze on enforcement."

The EA's core spending was £17.4m in 2011-12, falling to £16.9m in 2012-13. ESAET estimate the cost of waste crime to be between £324m to £808m, with a best estimate of £568m, caused by loss of revenue for legal waste sites, tax evasion where, for example, hazardous waste is deliberately classified as standard, and the clean-up costs of fly-tipping.

The report cites several cases of extreme waste crime, including the case of Allan Priest, who allowed 400 tonnes of household waste to be dumped on a trading estate in the Black Country despite not having a permit. He was eventually sentenced to eight months in prison.

Local authorities dealt with more than 711,000 incidents of fly-tipping alone in 2012-13.

As well as financial losses, the report notes that waste crime has environmental and health impacts. "Waste criminals don't recycle, and so frustrate efforts to move material up the waste hierarchy. When waste is illegally exported for cheap, unregulated reprocessing, people in developing countries are exposed to pollution we wouldn't tolerate here," it said.

An EA spokeswoman said: "At this time we are prioritising incident response above all other work. The detail of how different teams within the Environment Agency will be affected is not yet finalised."