True, but damming up the Nile would have been one hell of a challenge. And like many Commandments, this one is sufficiently blanket as to cover a lot of irrelevant turf... sould like you'd get your butt in a sling for damming up a single small ditch.
Perhaps the commandment-writer saw all the Pyramids going up and decided that one of these days some pharoh would get it into his head to build a pyramid in the middle of the Nile, and came up with this commandment to head him off at the pass.
More likely the prohibition on dams had to do with impeding the natural courses of waters which God (or the gods) intended to flow as they do.
The same issue arose in Catholicism, and showed a distinct difference between the French and the Spanish variants thereof. The French were great canal builders, linking the entire country by a system of canals that effectively gave France the waterway equivalent of a railroad by the mid-1600s. This was of enormous commercial benefit to the French, and was an infrastructural reason that France surged to such economic power under Louis XIII and XIV. Cardinal Richelieu and Cardinal Mazarin, as Prime Ministers, both invested heavily in the canal system and saw it much as Eisenhower saw the US Interstate Highway System.
Meanwhile, in Spain, the same concept of canals to link the river systems and, incidentally, irrigate the fertile but dry bottomlands was seriously considered. But it was opposed by various Spanish clergy, on mystical bases having to do with altering God's intent, etc.
The same sort of concept appears in the Magna Carta, which among other things orders the removal of all weirs and the building of no new weirs along various rivers.
The Spanish (and Norman-French rulers of England) were not thinking economically but religiously (or rather, superstitiously) when they opposed the construction of the canals. By contrast the French, just as Catholic as the Spaniards, had two Cardinals linking every medium sized village by a vast canal system which still operates today.
My guess is that the Egyptians were not thinking economically but superstitiously, just like the Spanish in the more recent example.
Commandments paint with broad brushes. They rarely draw fine lines between, say, damming up the Nile and damming up an irrigation ditch.
I'm not familiar with Egyptian religious practices, but I imagine, just as with the Catholic Church in the Middle Ages, there was probably a way to make donations to the appropriate god in order to receive forgiveness for smaller sins.