You’re correct, batteries thrown into landfills leak heavy metals into the ground, and burning batteries releases toxic waste into the atmosphere. The best way to dispose of used batteries is to find a battery recycling center near you.
You can also minimize your impact by using rechargeable batteries (though keep in mind that these are rich in heavy-metals). Alkaline batteries are also a good choice, since they are low in mercury. You can also look for mercury-free batteries.
Many big brand retailers–including Radioshack, Sears, Wal-Mart, Circuit City, Best Buy, Black and Decker, and sometimes Verizon Wireless–offer recycling services for rechargable batteries. Rechargable batteries eventually lose their capacity and also need to be recycled, since they contain dangerous materials such as Nickel Cadmium (NiCd), Lithium Ion (Li-ion), and Small Sealed Lead (Pb).
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