From Valve Developer Community
mat_dxlevel changes the DirectX mode used within a Source game. The player is only able to use modes that their hardware supports. The format is
mat_dxlevel [DirectX version] mat_dxlevel 70 mat_dxlevel 80 mat_dxlevel 81 ...
For DirectX 9 the value depends on the hardware's capability:
mat_dxlevel 90 - DX9 with Shader Model 2 mat_dxlevel 95 - DX9 with Shader Model 3
This can also be specified with Launch Options, use +mat_dxlevel [DirectX version] on the launch options of any Source game to do so. Alternatively, you can use -dxlevel [DirectX version], however this specifies a number of extra presets, including resolution and quality.