The correct answer is option 3 - Both 1 and 2.

Statement 1 is correct because cacti have adapted to arid environments by reducing their leaves to spines. These spines help to reduce water loss through transpiration and protect the plant from grazing animals. So, cacti do not have traditional leaves but instead have modified leaves in the form of spines.

Statement 2 is also correct because in a cactus, the stem is responsible for photosynthesis. The stem of a cactus contains chlorophyll and carries out the process of photosynthesis, converting sunlight into energy for the plant. This adaptation allows cacti to maximize their exposure to sunlight while minimizing water loss through transpiration.

Therefore, both statements are correct and option 3 is the correct answer.