Your talking about "hydraulic despotism". It might be real, but we can't know for sure. Basically, the despot oversees the water supply for irrigation and, due to the nature of the enterprise, is given full power over it and the society that relies on it. You can see it in other places as well with other resources. Thomas Friedman says the same thing is going on with petroleum, as nations that base their economy on oil almost all have dictatorships.

The reality is that the Hellenic democracies evolved out of despotism, as did Roman republicanism. Urbanism probably had more to do with democratizing Greece and Rome than environment. All the destabilizing able people living in a city rather than on their own lands created a requirement that they all have a chance to exercise power.