Incense and biomes

It is related to whatever you are supposed to see around you. During the unknown event in London I popped incense and got unknown. Grass events I popped and got grass mon.

Yes incense spawns are influenced by the biome of where you are.

It's actually totally random. I've done the incense trick where you can get a Pokemon a minute, though max I've ever spawned is 29, and have caught more water types than I would normally see living in a desert/rock Biome. It was literally the only way for me to catch a Magikarp before the water event. Caught a Dratini once too which don't spawn here at all. Even caught a 2100+ CP Slowbro and only time we'll see a Slowpoke is from eggs or a really small nest.