Was it always the arid desert that it is today, or was it a gradual process of desertification? Did desertification tie into the decline of Egyptian power?
You might find this post I wrote in another thread interesting. It's about the desertification of Egypt and I linked a couple of figures showing how it proceeded.
In addition to /u/EvanRWT's answer, which covers a time period that I'm less familiar with, two of the major issues with water scarcity in modern/contemporary Egypt relate to the construction of dams and the massive growth in population along the entire length of the Nile from the African Great Lakes states, through Ethiopia, Sudan and eventually into Egypt.
I wouldn't normally "cite" Daniel Pipes for a lot of topics and the article gets into contemporary politics but his basic figures are correct in this article when he points out that while the annual volume water of water flowing into Egypt since 1929 has remained the same, the population of Egypt has multiplied several times over the course of the 20th century, leaving substantially less water per person.
The construction of dams in the 20th century, culminating with the Aswan High Dam in the 50's, also fundamentally changed the nature of agriculture in Egypt, where before the annual flooding deposited fertile silt along the entirety of the Nile, with the dams providing flood control this no longer happens. As a result Egypt is one of the world's largest consumers of artificial fertilizers.
While agricultural efficiency expanded significantly in the 20th century as a result of the use of fertilizers and modernization programs, the efficiencies did not keep pace with the population boom and as a result, over the course of the 20th century, Egypt became one of (and is today the largest) importer of wheat. Late 20th century food subsidies exacerbated this problem, in that government policy meant that bread has in many cases been cheaper than animal feed.
I realize you're probably referring to a decline in Ancient Egyptian power, but these pressures have substantially challenged the resources of the Egyptian state in the 20th century (and beyond).