B.C. missed out on more than $2 billion in economic activity over the past decade because of rising fares on BC Ferries, according to a report released today.

The policy paper, which was released by the Union of B.C. Municipalities on Wednesday, is the first ever socioeconomic report on the Crown corporation.

It concluded the fare hikes led to an 11 per cent decline in ridership since 2003.

Had the fare increases been limited to the rate of inflation over that time period, ridership would have grown by 19 per cent, the report said.

That would have added $2.3 billion dollars to the provincial economy, and generated $609 million in tax revenue for the federal, provincial and municipal governments, it concluded.

The Union of B.C. Municipalities plans to use the report to bolster its call for the government to restore fares and service to 2013 levels.

"The release of this report provides an opportunity to re-think the policies that direct the funding of BC Ferries," said a statement released by UBCM president Rhona Martin.

"This study demonstrates a clear link between fare increases and declining ridership, and the cost of those fare increases to the provincial economy."

It also plans to use statistics to argue the government needs to view the ferry service as an extension of the highway system.

The study also noted that BC Ferries recovers about 92 per cent of its cost through fares, making it comparable to other public transit systems.

"The findings of the study show that we already have an efficient system in terms of cost recovery," said Sidney Mayor Larry Cross, in the statement.

"What is missing is recognition by the province that ferry service is an extension of the highway system and needs to be funded accordingly."

The report will be discussed by local government politicians two weeks from now at the UBCM's annual convention in Whistler.